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on Technology and Industrial Dynamics |
| By: | Holly, S.; Petrella, I. |
| Abstract: | This paper investigates the drivers of industry and aggregate fluctuations. We model the dynamics of a panel of highly disaggregated manufacturing sectors. This allows us to consider directly the linkages between sectors typical of any production system, in a framework where the sectors are fully heterogeneous. We establish that these features are fundamental for the propagation of the shocks in the aggregate economy. Aggregate fluctuations can be accounted for by small industry specific shocks. Moreover, a contemporaneous technology shock to all sectors in the economy, i.e. an aggregate technology shock, implies a positive response in both output and hours at the aggregate level. When this intersectoral channel is neglected we find a negative correlation as with much of the literature. This suggests that the standard technology driven Real Business Cycle paradigm is a reasonable approximation of a more complicated model featuring heterogenously interconnected sectors. |
| Keywords: | Sectors, Technology shocks, Business cycles, Long-run restrictions, Cross Sectional Dependence. |
| JEL: | E20 E32 C31 C51 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:0827&r=tid |
| By: | Werner Hölzl (WIFO) |
| Abstract: | This paper studies the R&D behaviour of fast growing SMEs using CIS III data for 16 countries. We group the countries into three groups that roughly have the same position in technological development. The first finding is that R&D is more important to high growth SMEs in countries that are closer to the technological frontier. The second finding is that high growth SMEs are more innovative than non-high-growth SMEs only for countries close to the technological frontier. This suggests that gazelles derive much of their drive from the exploitation of comparative advantages. From a policy perspective this suggests that there are important limits to centralise policies that aim at fostering high growth SMEs. |
| Keywords: | R&D, high growth firms, Europe, CIS |
| Date: | 2008–08–21 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2008:i:327&r=tid |
| By: | Enchuan Shao; Pedro Silos |
| Abstract: | We present a model of aggregate fluctuations in which monopolistic firms face sunk costs to enter the production process and labor markets are characterized by search and matching frictions. Entrants post vacancies and are matched to idle workers. Our specification of sunk costs gives rise to a countercyclical net present value of a vacancy; it is always zero in models where entry is free. The model displays a strong degree of amplification and propagation. The time-varying value of a vacancy has implications for the surplus division between firms and workers over business cycle. In the data, we proxy this division using the ratio of corporate profits to output and workers' compensation to output. We document the cyclical behavior of profit's and labor's shares: Profit's share leads the cycle and is procyclical and more volatile than output. Labor's share inversely leads the cycle and is weakly countercyclical and smoother than output. Our model is consistent with the cross-correlations of both shares and the higher volatility of the share of profits. Regarding propagation and amplification, the model matches the persistence of vacancy creation and two-thirds of the observed volatility of market tightness relative to output. |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:2008-17&r=tid |
| By: | André van Stel; Andrew Burke |
| Abstract: | Despite the fact that the main contribution of entrepreneurship theory to economics has been to provide an account of the performance of markets in disequilibrium, little empirical research on entrepreneurship has examined firm entry and exit in this context. In this paper, we attempt to redress this by modelling the interrelationship between firm entry and exit rates in disequilibrium. Using a data base of Dutch retail industries over the period 1980-2001, we are able to distinguish between displacement (entry causing exit) and replacement (exit causing entry) effects. We introduce a new methodological approach which allows us to investigate whether the relations under consideration differ between situations of undershooting’ (the actual number of firms is below the equilibrium number) and ‘overshooting’ (vice versa). We find that the equilibriumrestoring mechanisms are different in these two situations – being faster in over than undershoots. Our estimation results also imply that for undershooting, a lack of competition between incumbent firms contributes to restoration of equilibrium (creating room for new-firm entry) while in overshooting competition induced by new firms (in particular strong displacement) causes the number of firms to move towards equilibrium. The research helps to embed entrepreneurship theory into mainstream economics in a manner that adds greater insight into the performance of markets in disequilibrium. |
| Date: | 2008–07–24 |
| URL: | http://d.repec.org/n?u=RePEc:eim:papers:h200809&r=tid |