Arbeitspapier
Firm exit during recessions
We analyze a general equilibrium model of firm dynamics to study the effects of shocks to productivity, labor wedge, and collateral constraint (credit shock) on firm exit. We find that only the credit shock increases firm exit. This result is robust to the magnitude of shocks and different model specifications. Calibrating the model to match the behavior of output, employment, and firm debt during the Great Recession (2007-2009) in the United States, we find that the credit shock accounts for the observed rise in firm exit and its concentration among young firms. Furthermore, it accounts for 20 percent of the drop in output and employment.
- Language
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Englisch
- Bibliographic citation
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Series: IDB Working Paper Series ; No. IDB-WP-1117
- Classification
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Wirtschaft
Firm Behavior: Theory
Firm Behavior: Empirical Analysis
Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
Business Fluctuations; Cycles
- Subject
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Credit
Firm dynamics
General equilibrium model
Output
Employment
- Event
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Geistige Schöpfung
- (who)
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Ayres, Joao
Raveendranathan, Gajendran
- Event
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Veröffentlichung
- (who)
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Inter-American Development Bank (IDB)
- (where)
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Washington, DC
- (when)
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2020
- DOI
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doi:10.18235/0002289
- Handle
- Last update
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10.03.2025, 11:43 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Ayres, Joao
- Raveendranathan, Gajendran
- Inter-American Development Bank (IDB)
Time of origin
- 2020