The current recession has highlighted the potentially severe impact of shrinkages in demand and fiscal austerity upon firm entry and survival. Using data covering broad manufacturing and service sectors in 17 countries this paper investigates how changes in fiscal policy and market size affect...

We develop a two-sector DSGE model with financial intermediation to investigate the role of news as a driving force of the business cycle. We find that news about future capital quality is a significant source of aggregate fluctuations, accounting for around 37% in output variation in cyclical...

This paper investigates why plants belonging to multi-plant firms are more likely to exit. Using Japanese plant data linked to firm data we study the process of plant closure among domestic multi-plant firms as well as multi-plant multinationals. As elsewhere in the literature these...

Using a two-sector estimated DSGE model with a financial channel we show the sector where TFP news arrives matters for its propagation and quantitative importance. Anticipated increases in TFP expected to arrive in the consumption sector are expansionary while those in the investment sector are...

We estimate a two-sector DSGE model with financial intermediaries—a-la Gertler and Karadi (2011) and Gertler and Kiyotaki (2010)—and quantify the importance of news shocks in accounting for aggregate and sectoral fluctuations. Our results indicate a significant role of financial market news...

The current recession has highlighted the potentially severe impact of shrinkages in demand and fiscal austerity upon firm entry and survival. Using data covering broad manufacturing and service sectors in 17 countries this paper investigates how changes in fiscal policy and market size affect...

This paper studies the process of plant exit and productivity growth in Japan during the ‘lost decade’. A productivity decomposition shows the low rate of productivity growth at the aggregate level to be due to slow within plant productivity growth and a small contribution from the entry and...

In the literature there is substantial evidence that a plant is more likely to be closed down if it is owned by a firm with other plants or is owned by a multinational enterprise (MNE). But does ownership or multi-plant status matter for which plants are closed? Using Japanese data we study...