Adam Smith Business School

Professor Patrizio Tirelli, University of Pavia

"Who killed business dynamism in the U.S.?"
Thursday, 15 June. 3 pm
Room 305, Main Building

Abstract

Was it an exogenous productivity slowdown, a decline in competition, or both?
We offer a new interpretation of the long-term dynamics in the U.S. firm entry rate. Its decline was the consequence of a persistent combination of adverse (favourable) productivity shocks to potential entrants(incumbents). In specific historical episodes, shocks to markups and fixed production costs lowered(raised) the entry rate. Our model incorporates the traditional “Schumpeterian” reallocation of inputs towards more productive firms. In spite of this, we find that not all recessions had a “cleansing” effect because the shocks that caused the recessions did not matter for average firm efficiency and vice versa. Finally, the extensive margin allows us to rationalize the procyclical pattern of TFP growth.

Bio

Patrizio Tirelli is a Professor of Economics at the University of Pavia. Before coming to Pavia, he was a Professor of Economics at Università di Milano Bicocca, where he also served as head of the Department of Economics Management and Statistics between 2007 and 2014. He is a senior fellow of RCEA, Vice-director of RCEA-Europe, Director of the Center of Analysis and Measurement of Systemic Risks (CAM-Risk, University of Pavia) and Adjunct Professor at Griffith University, Brisbane.

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First published: 14 May 2023