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on Business Economics |
| By: | Nivala, Annika |
| Keywords: | Business subsidies, Wage subsidies, Firm behavior, Labor demand, Entrepreneurship, Small Business, Business taxation and regulation, H25, H32, J23, J38, M51, fi=Elinkeinopolitiikka|sv=Näringspolitik|en=Industrial and economic policy|, fi=Työmarkkinat|sv=Arbetsmarknad|en=Labour markets|, |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:fer:wpaper:166&r= |
| By: | Maideu-Morera, Gerard |
| Abstract: | I study a dynamic cash flow diversion model between a risk neutral lender and a risk averse entrepreneur who has persistent private information about the firm’s productivity. In the optimal contract, the firm’s size is always distorted downwards and its distortions inherit the autoregressive properties of the type process. The entrepreneur’s compensation is smoothed and decoupled from the firm size dynamics. These results contrast those of equivalent models with risk neutrality. I use numerical simulations to study a quasi-implementation with simpler contracts, which highlights that this class of models is unable to generate realistic firm size and equity share dynamics simultaneously. |
| Keywords: | Firm dynamics; financing constraints; recursive contracts;persistent private information |
| JEL: | D82 G32 L14 |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:129337&r= |
| By: | S. Borağan Aruoba; Eugene Oue; Felipe Saffie; Jonathan Willis |
| Abstract: | We develop a simple menu-cost model with non-constant elasticity of demand that features idiosyncratic productivity and demand shocks. The model is calibrated to match firm-level productivity and demand processes estimated from U.S. data. Despite its simplicity, the calibrated model delivers untargeted pricing dynamics and a markup distribution that are consistent with U.S. micro data. Moreover, it also generates sizable monetary non-neutrality that rivals more complicated alternative menu cost models that explicitly target pricing dynamics. The key in reconciling firm and pricing dynamics comes from the interaction between non-constant elasticity of demand and idiosyncratic demand shocks. Thus, this framework effortlessly unifies pricing, markup, and firm dynamics. |
| JEL: | E30 E52 L11 |
| Date: | 2024–05 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32518&r= |
| By: | Kenan Huremovi\'c; Federico Nutarelli; Francesco Serti; Fernando Vega-Redondo |
| Abstract: | Using data on the Spanish firm-level production network we show that firms learn about international trade opportunities and related business know-how from their production network peers. Our identification strategy leverages the panel structure of the data, import origin variation, and network structure. We find evidence of both upstream and downstream network effects, even after accounting for sectoral and geographical spillovers. Larger firms are better at absorbing valuable information but worse at disseminating it. Connections with geographically distant firms provide more useful information to start importing. |
| Date: | 2024–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2405.13422&r= |
| By: | Joseph A. Aguilar; Randall Akee; Elton Mykerezi |
| Abstract: | We examine how one of the largest U.S. place-based economic development programs, the Indian Gaming Regulatory Act (IGRA) of 1988, with annual revenues in excess of \$40 billion, affects local firm total employment and sales through direct channels and through IGRA's effects on adjacent non-gaming industry firms. Our analysis focuses on the effect of this national (across 29 U.S. states) place-based economic development program over several decades. We create a novel data set linking a firm-level panel dataset of business outcomes and tribal casino operations by geographic location over several decades. We find that after the start of tribal casino operations, there is a substantial average increase in employment and sales for local firms. We also show that casino operations drive initial increases in employment and sales; however, pre-existing firms also realize gains in employment and sales in the subsequent 2-5 years after the start of casino operations. These effects also spill over to firms in non-related industries; in our analysis, we exclude the Arts, Entertainment, Recreation, Accommodation and Food Services industries and we continue to observe higher employment for firms located on tribal reservations with casino operations. We provide the first evidence on the impact of place-based economic development on long-run business outcomes in some of the most underdeveloped regions in the U.S. |
| JEL: | H55 O12 O18 R11 |
| Date: | 2024–06 |
| URL: | https://d.repec.org/n?u=RePEc:nbr:nberwo:32555&r= |
| By: | Huremovic, Kenan; Nurarelli, Federico; Serti, Francesco; Vega-Redondo, Fernando |
| Abstract: | Using data on the Spanish firm-level production network we show that firmslearn about international trade opportunities and related business know-how from their production network peers. Our identification strategy leverages the panel structure of the data, import origin variation, and network structure. We find evidence of both upstream and downstream network effects, even after accounting for sectoral and geographical spillovers. Larger firms are better at absorbing valuable information but worse at disseminating it. Connections with geographically distant firms provide more useful information to start importing. |
| Keywords: | Production Network; Learning; Spillovers; Import |
| Date: | 2024–06–06 |
| URL: | https://d.repec.org/n?u=RePEc:cte:werepe:43951&r= |