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  • Istituto di Economia
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On firm exit during the Great Recession: a tale of two crises?

Data 04.04.2017 orario
Indirizzo

Piazza Martiri della Libertà, 33 , 56127 Italia

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The Institute of Economics will hold the next meeting of its Seminar Series on Tuesday, April 4, 2017: Tommaso Ferraresi, from IRPET, will present the paper ON FIRM EXIT DURING THE GREAT RECESSION: A TALE OF TWO CRISES?.

Abstract:

A number of studies have recently focused on this issue but these mostly explore the first phase of the crisis for which a broad set of data has been earlier available. Although it might be questioned whether the crisis has today come to an end, we believe that the time is ripe for a more general assessment that encompasses a large part of the second period of recession. The analysis of firm selection mechanisms in recessions is crucial in order to assess the resilience of an economic system.Exploiting the data referred to Tuscany between 2008 and 2014, we estimate a discrete time complementary log-log survival model aiming to assess whether and to what extent alternative firm selection mechanisms have worked throughout the crisis, by allowing crucial firm characteristics to interact with time. In particular, we look at how productivity and profitability have differently contributed to firm dynamics over time, and whether the interaction with export propensity and leverage have constituted meaningful additional channels. In a nutshell, our results show that more productive firms have been less likely to exit the market during the crisis. However, market power has constituted an alternative selection mechanism and provided an alternative escape for less efficient firms.