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The Macroeconomic Dynamics of Generations of Firms

Author

Listed:
  • Masashige Hamano

    (Faculty of Political Science and Economics, Waseda University)

  • Toshihiro Okubo

    (Faculty of Economics, Keio University)

Abstract

This paper investigates the dynamics specific to various firm cohorts and their implications at an aggregate level. Utilizing a structural model that incorporates entry, exit, and selection of heterogeneous firms, we demonstrate that the dynamics of firms from each generation, and thus the historical economic landscape, can be reconstructed. Moreover, we estimate generation-specific parameters in both demand and supply within our theoretical model, using Japanese data. Our findings reveal that fixed operational costs for firms established immediately after the Second World War are relatively lower compared to subsequent generations of firms, resulting in an increased market congestion for these early-born enterprises.

Suggested Citation

  • Masashige Hamano & Toshihiro Okubo, 2023. "The Macroeconomic Dynamics of Generations of Firms," Working Papers 2307, Waseda University, Faculty of Political Science and Economics.
    • Handle: RePEc:wap:wpaper:2307
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    References listed on IDEAS

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    More about this item

    Keywords

    Heterogeneity; fixed cost; business cycles;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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