Finance and Economics Discussion Series (FEDS)

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May 2016

Firm Entry and Macroeconomic Dynamics: A State-level Analysis

Francois Gourio, Todd Messer, and Michael Siemer

Abstract:

Using an annual panel of US states over the period 1982-2014, we estimate the response of macroeconomic variables to a shock to the number of new firms (startups). We find that these shocks have significant effects that persist for many years on real GDP, productivity, and population. This is consistent with simple models of firm dynamics where a "missing generation" of firms affects productivity persistently.

Accessible materials (.zip)

Keywords: Productivity, business dynamics, employment, firm entry, missing generation, new business formation

DOI: http://dx.doi.org/10.17016/FEDS.2016.043

PDF: Full Paper

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Last Update: June 19, 2020