Industry Evolution and Transition: A Neoclassical Benchmark / Andrew Atkeson, Patrick Kehoe.

Format:

Book

Author/Creator:

Atkeson, Andrew.

Contributor:

National Bureau of Economic Research.

Kehoe, Patrick.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6005.

NBER working paper series no. w6005

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Industry Evolution and Transition

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1997.

Summary:

Recently, a large number of countries have undertaken major reforms that have led to a large increase in the number of new enterprises. After these reforms, however, it has taken a number of years before output and productivity have begun to grow. The thesis of this paper is that the process of starting new enterprises is turbulent and time-consuming and as a result, it takes time before the benefits of reform show up in increases in measured output and productivity. To establish a neoclassical benchmark for reforming economies, we ask what the path of transition looks like in a reforming economy for which the process governing the growth of new enterprises looks like it does in the U.S., a well-functioning market economy. We find that it takes 5-7 years until measured output and productivity begin to grow rapidly following reform. This finding suggests that, even if all other aspects of the economy are perfect, the transition following economy-wide reforms should take a substantial amount of time.

Notes:

Print version record

April 1997.