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Working Paper
Aggregate Implications of Deviations from Modigliani-Miller: A Sufficient Statistics Approach
A few sufficient statistics can identify the aggregate effects of distortions to firm investment in a class of general equilibrium models that can accommodate rich general equilibrium effects including endogenous firm entry. This result does not depend on the microfoundation of the distortion; one can generate inferences about aggregate effects that apply for multiple microfoundations or in cases where a fully specified model is difficult to solve. To demonstrate the relevance of themethodology, we use it to quantify the aggregate consequences of costly external equity financing and a ...
Working Paper
Firm Entry and Macroeconomic Dynamics: A State-level Analysis
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 result is consistent with simple models of firm dynamics where a ?missing generation? of firms affects productivity persistently.
Working Paper
Aggregate Implications of Deviations from Modigliani-Miller: A Sufficient Statistics Approach
A few sufficient statistics can identify the aggregate effects of distortions to firm investment in a class of general equilibrium models that can accommodate rich general equilibrium effects including endogenous firm entry. This result does not depend on the microfoundation of the distortion; one can generate inferences about aggregate effects that apply for multiple microfoundations or in cases where a fully specified model is difficult to solve. To demonstrate the relevance of themethodology, we use it to quantify the aggregate consequences of costly external equity financing and a ...