Firm Entry and Macroeconomic Dynamics: A State-level Analysis

Gourio, François; Messer, Todd; Siemer, Michael

Working Paper

Firm Entry and Macroeconomic Dynamics: A State-level Analysis

Abstract: Using an annual panel of U.S. 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 gross domestic product, productivity and population. This is consistent with simple models of firm dynamics where a ?missing generation? of firms affects productivity persistently.

Keywords: Business cycles; Firms entry; firm dynamics; Gross Domestic Product; macroeconomics; productivity; population;

JEL Classification: E31; E32; L1; L16;