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Abstract

Various empirical works have shown that dispersion of firm-level profitability is significantly countercyclical. I incorporate firms- technology adoption decision into firm dynamics model with business cycle features to explain these empirical findings both qualitatively and quantitatively. The option of endogenous exiting and credit constraint jointly play an important role in motivating firms- risk taking behavior. The model predicts that relatively small sized firms are more likely to take risk, and that the dispersion measured as the variance-standard deviation of firm-level profitability is larger in recessions, which are consistent to the data.



Item Type: MPRA Paper -

Original Title: Technology choice and endogenous productivity dispersion over the business cycles-

Language: English-

Keywords: Firm Dynamics; Business Cycles; Countercyclical Dispersion-

Subjects: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and ScopeL - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure ; Size Distribution of FirmsE - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles-





Autor: Tian, Can

Fuente: https://mpra.ub.uni-muenchen.de/34480/







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