Credit Frictions and The Cleansing Effect of Recessions

• 成果类型: Article
• 署名作者: Osotimehin, Sophie; Pappada, Francesco
• 署名单位: University of Virginia; European Central Bank; Bank of France
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1111/ecoj.12319
• 发表日期: 2017
• 页码: 1153-1187
• 关键词: agency costs; net worth; PRODUCTIVITY; survival; entry; FIRMS; EXIT

摘要

Recessions are conventionally considered as times when the least productive firms are driven out of the market. How do credit frictions affect this cleansing effect of recessions? We build and calibrate a model of firm dynamics with credit frictions and endogenous entry and exit to investigate this question. We find that there is a cleansing effect of recessions in the presence of credit frictions, despite their effect on the selection of exiting and entering firms. This result holds true regardless of the nature of the recession: average firm-level productivity rises following a negative aggregate productivity shock, as well as following a negative financial shock.