A unified theory of firm selection and growth--论文代写范文精选

51Due论文代写网精选essay代写范文：“A unified theory of firm selection and growth” 通过分析框架，这篇经济essay代写范文主要研究公司发展和出口增长，提供了一个贸易标准，这也是公司的生产力改进的结果,有新的潜在生产者。公司进入市场,盈利所产生的边际成本达到消费和支付成本。校准模型预测,一个公司的增长是负相关的，相对于初始大小和小公司的增长率的倾斜。这些预测被证实。

使用这个模型来研究再分配对经济活动的影响。在市场经济中，小型企业成长起到关键作用。他们常常运用创新理念和最快的增长速度成为经济增长的主要贡献者。下面的essay代写范文进行阐述。

Abstract 

This paper develops an analytical framework to study firm and exporter growth and provides a dynamic foundation for a standard general equilibrium trade model. Firm-level growth is the result of idiosyncratic productivity improvements and there is continuous arrival of new potential producers. A firm enters a market if it is profitable to incur the marginal cost to reach the first consumer and pays an increasing marketing cost to reach additional consumers. I calibrate the model using data on the cross section of firm sales and bilateral trade, as well as the rate of incumbent firm exit. The calibrated model predicts that a firm’s growth is inversely related to its initial size and that the distribution of growth rates of small firms is heavily skewed to the right. These predictions are confirmed by looking at the growth of sales of US firms and Brazilian exporters to the US. I use this model to study the impact of cross-firm reallocations on economic activity and measured productivity. JEL codes: F12, L11, M31, D92.

Introduction 

Small firms play a key role in the growth process of a market economy. They are often carriers of new innovative ideas and the most successful of those quickly become major contributors to economic growth. Policy makers are particularly interested in analyzing the expansion of these firms, which requires the development of an analytical fremework to understand firm growth.1 As exporter growth in individual exporting destinations shares similar features to domestic firm growth, such a framework is also important for understanding exporter dynamics. Nevertheless, recent theories of firm growth that rely solely on firm idiosyncratic productivity improvements as a driver of firm dynamics are often at odds with the strong inverse empirical relationship between the growth rate and its variance and initial firm/exporter size.2 

As such, they are not well equipped to evaluate the importance of small firms in economic growth. This paper develops a theory of firm selection–entry and exit–and growth that is consistent with empirical evidence on the growth of firms in individual foreign markets and uses it to assess cross-firm reallocations in response to aggregate shocks, such as aggregate technology increases or trade shocks. The key insight is to integrate a model of firm dynamics based on idiosyncratic productivity shocks (Luttmer (2007)) with a theory of demand based on market penetration costs (Arkolakis (2010)). 

In this combined theory of technology and demand, productivity drives firm growth while market penetration costs introduce important non-homogeneities into this process. Thus, the demand structure implies that improvements in the underlying fundamentals offer asymmetric expansion opportunities to small domestic firms and exporters.3 The model generates robust predictions for firm dynamics in each market and can reconcile the inverse empirical relationship between the growth rate and its variance and firm/exporter size. The new approach offers a unified analytical framework for firm dynamics in the domestic and exporting markets alike and can accommodate a variety of different stochastic processes for firm productivity improvements. 

The model aggregates to the standard general equilib-rium multi-market framework of Melitz (2003), consistent with observations on aggregate bilateral trade. In this unified framework, I show that there exists a unique equilibrium under any configuration of trade costs and aggregate technology shocks, so that the model is potentially a useful tool for studying the interactions between aggregate and firm growth. A firm enters a market only if it finds it profitable to incur the marginal cost to reach the first consumer. Reaching additional consumers in the market requires incurring an increasing marginal market penetration cost. This firm market penetration choice generates an effective demand per market with an elasticity that declines with firm size and asymptotically tends to the Constant Elasticity of Substitution (CES) form. 

Firm growth is related to this elasticity with the expected growth rate of the largest firms being asymptotically constant. Thus, incorporating market penetration costs is an alternative form of modeling a variable elasticity of demand. This demand specification is widely used in the trade literature.4 To keep the analysis tractable I introduce a minimalist setup of firm entry and exit. I assume that new ideas arrive at a constant rate and each one can be used by a monopolistically competitive firm to produce a differentiated good. These ideas become firms only if they are used in production. If not, they enter a mothball state until a future shock to firm productivity makes production profitable. 

This setup implies that the size of entrants is typically small and roughly equal to the size of exiting firms. Evidence on US manufacturing firms from Dunne, Roberts and Samuelson (1988) and on Brazilian exporters confirms this prediction but is at odds with a setup with sunk costs of entry, which implies that the average size of entrants is larger than that of exiting firms. In my analysis, I consider as the benchmark case for a stochastic process a geometric Brownian motion with a drift, as in Luttmer (2007), whereby the growth rate of productivities is independent of its level. 

This specification provides dynamic micro-foundations to the standard distributional assumption of many trade models (Pareto right tails), and allows me to analytically characterize the implications of the model for firm growth. I argue that a fixed cost model combined with firm selection, essentially the Luttmer (2007) setup, is fundamentally inconsistent with the inverse relationship between the mean and variance of growth of firms and their initial size. In that model, surviving firms with small initial size have higher growth rates but a lower variance of growth compared with firms with larger initial size. 

In the model of endogenous market penetration costs there is a higher variance of the growth rate of small firms due to their market penetration choice. Because of this choice, the model also implies a distribution of growth rates of small firms skewed towardslarge growth rates, strikingly different vis-a-vis the fixed cost model. Put differently, the higher elasticity of demand for small firms implies higher variance of growth but also the potential for faster growth. The model retains the basic structure of a static trade model. This important property allows me to use the wealth of micro-data on exporters to calibrate the benchmark version of the model. 

I first choose the parameters that affect the static predictions–the parameters that relate to firm demand–using data on the cross-section of firm sales and bilateral trade flows. I then calibrate the drift and the variance of the technological process of firm productivity using the observed rate of exit of incumbent firms, but without using information on firm growth. To do so, I once again exploit the cross-sectional restrictions imposed by the model and the fact that the elasticity of trade in the model is the shape parameter of the (Pareto) size distribution of firm productivities, as in the static model. The latter parameter endogenously arises in the model as a function of the drift and variance of firm productivity. With this calibration, the model delivers rich dynamic predictions with just one net additional calibrated parameter than its static counterpart. In fact, despite the minimal information on firm exit used for its calibration, the entry-exit process implied by the model accurately predicts the exit rates of both incumbent firms and new entrants in US manufacturing for a time span of two decades. 

In addition, it predicts the mean growth-size relationship for US firms and Brazilian exporters in the US across different firm percentiles. In both these cases, the fixed cost model falls short of replicating the quantitative evidence.5 This success of the endogenous cost model suggests that stylized facts on firm dynamics are intimately linked to the cross-sectional ones, hence the desirability of a “unified” theory of firm selection and growth to analyze firm and exporter growth. Next, I evaluate the implications of the calibrated model for exporter growth. To this end, I first present novel evidence on the distribution of growth rates for firms of different initial size and age. In particular, I use data on the sales of Brazilian exporters to the US and verify the prediction of the endogenous cost model that the distribution of growth rates is fundamentally different for small versus large exporters: for small exporters it is skewed towards high growth rates, while for large exporters it is roughly shifted lognormal and heavily concentrated around zero growth. In turn, I show that the calibrated endogenous cost model generates such a distribution for different size quartiles. In addition, using the same data, I present the distribution of sizes and growth rates of exporters of different ages. Whereas there is a shift of the distribution of sizes with age, the distribution of growthrates remains roughly constant with age. For exporter growth, size appears to play a more prominent role than exporting age.（essay代写)

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