Slow convergence in economies with firm heterogeneity
This paper presents a simple formula that relates the tail index of the firm size distribution to the aggregate speed with which an economy converges to its balanced growth path. The fact that there are so many firms in the right tail implies that aggregate shocks that permanently destroy employment among incumbent firms, rather than cause these firms to scale back temporarily, are followed by slow recoveries. This is true despite the existence of many rapidly growing firms.
Year of publication: |
2012
|
---|---|
Authors: | Luttmer, Erzo G.J. |
Institutions: | Federal Reserve Bank of Minneapolis |
Saved in:
freely available
Saved in favorites
Similar items by person
-
Eventually, noise and imitation implies balanced growth
Luttmer, Erzo G.J., (2012)
-
The Stolper-Samuelson effects of a decline in aggregate consumption
Luttmer, Erzo G.J., (2013)
-
Models of firm heterogeneity and growth
Luttmer, Erzo G.J., (2010)
- More ...