Entry Costs and the Macroeconomy / Germán Gutiérrez, Callum Jones, Thomas Philippon.

Format:

Book

Author/Creator:

Gutiérrez, Germán.

Contributor:

Jones, Callum.

Philippon, Thomas.

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25609.

NBER working paper series no. w25609

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

We propose a model to identify the causes of rising profits and concentration, and declining entry and investment in the US economy. Our approach combines a rich structural DSGE model with cross-sectional identification from firm and industry data. Using asset prices, our model estimates the realized and anticipated shocks that drive the endogeneity of entry and concentration and recovers shocks to entry costs. We validate our approach by showing that the model-implied entry shocks correlate with independently constructed measures of entry regulation and M&A activities. We conclude that entry costs have risen and that the ensuing decline in competition has depressed consumption by five to ten percent.

Notes:

Print version record

February 2019.