We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A … provides a good fit to the dynamics of firm entry and exit, output and R&D, and its implied elasticities are in the ballpark of ….5% because it deters entry of new high-type firms. On the contrary, substantial improvements (of the order of 5% improvement in …

patents, and simulated method of moments using microdata on employment, production, R&D, firm growth, entry and exit from the …

through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation …