Firm Dynamics in News Driven Business Cycle: The Role of Endogenous Survival Rate

Fan, Haichao and Xu, Zhiwei and Zou, Wei (2010): Firm Dynamics in News Driven Business Cycle: The Role of Endogenous Survival Rate.

Abstract

Evidences from structural VAR show that new business formation positively co-moves with output under news shocks. The Jaimovich-Rebelo model augmented with firm dynamics can explain the empirical findings. The key assumption is endogenous survival rates for new entrants.

• Item Type: MPRA Paper
• Language: English
• Keywords: Firm Dynamics, Aggregate Co-movement, Expectation-Driven Business Cycle, News Shocks
• Subjects: E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E2 - Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy > E22 - Investment ; Capital ; Intangible Capital ; Capacity

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