LIMITED RE-ENTRY AND BUSINESS CYCLES
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This paper builds a model of firm dynamics to study the consequences of “Limited re-entry” for macroeconomic dynamics. In the literature, exit has typically been modeled as a permanent decision whereby it is not possible for an exiting plant or firm to “re-enter” in the future. This paper relaxes this assumption by assuming that the exit decision is not permanent, but that an exiting producer still has a “limited” ability to re-enter. The model, reasonably calibrated, indicates that limited re-entry has made business cycles more volatile and persistent, and has contributed to the slow recovery following the 2007-09 recession.
Abstract
This paper builds a model of firm dynamics to study the consequences of “Limited re-entry” for macroeconomic dynamics. In the literature, exit has typically been modeled as a permanent decision whereby it is not possible for an exiting plant or firm to “re-enter” in the future. This paper relaxes this assumption by assuming that the exit decision is not permanent, but that an exiting producer still has a “limited” ability to re-enter. The model, reasonably calibrated, indicates that limited re-entry has made business cycles more volatile and persistent, and has contributed to the slow recovery following the 2007-09 recession.
참고문헌 (26)
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