Open Access
Did US business dynamism recover in the 2010s?
(2021) Aguilera Bravo, Asier; Casares Polo, Miguel; Khan, Hashmat; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE; Economía
We provide evidence that both firm and establishment entry rates in the US have been increasing over the past decade, seemingly ending the secular decline observed over previous decades. However, the job-size of new businesses relative to incumbents has decreased substantially. Controlling for these opposite trends reveals that the size-adjusted entry rate continues to decline.
Open Access
A structural analysis of US entry and exit dynamics. Technical appendix
(2018) Casares Polo, Miguel; Khan, Hashmat; Poutineau, Jean-Christophe; Economía; Ekonomia
A. The optimizing programs of the model and other technical details (pages 1-7) B. Short-run and long-run equilibria in the DSGE model with endogenous entry and exit (pages 8-12) C. Average productivity (pages 13-15) D. Data and measurement equations (pages 16 and 17) E. The loglinearized equation for short-run fluctuations of critical productivity, zcr (pages 18 and 19) F. Aggregation (pages 20-24) G. The overall resources constraint (pages 25 and 26) H. Estimated shock decomposition for US data (pages 27-31) I. The sources of fluctuations in the Great Recession (pages 32-37)
Open Access
COVID-19 pandemic and economic scenarios for Ontario
(2020) Casares Polo, Miguel; Gomme, Paul; Khan, Hashmat; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE; Economía
To study the efficacy of the public policy response to the COVID-19 pandemic, we develop a model of the rich interactions between epidemiology and socioeconomic choices. Preferences feature a 'fear of death' that lead individuals to reduce their social activity and work time in the face of the pandemic. The aggregate effect of these reductions is to slow the spread of the coronavirus. We calibrate the model, including public policies, to developments in Ontario in spring 2020. The model fits the epidemiological data quite well, including the second wave starting in late 2020. We find that socioeconomic interventions work well in the short term, resulting in a rapid drop off in new cases. The long run, however, is governed chiefly by health developments. Welfare cost calculations point to synergies between the health and socioeconomic measures.
Open Access
A dynamic model of COVID-19: contagion and implications of isolation enforcement
(2020) Casares Polo, Miguel; Khan, Hashmat; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE; Economía
We present a dynamic model that produces day-to-day changes in key variables due to the COVID-19 contagion: the number of ever infected people, currently infected, deaths, healed, and infected people who require hospitalization. The model is carefully calibrated to Spanish data and we conduct simulation exercises to study the role of isolation measures to contain the virus spread. We find that virus containment from isolation exhibits increasing returns. Our model simulations show that the State of Alarm intervention of the Spanish government on March 14th, 2020 reduces deaths by almost 85%, and lowers the maximum number of infected people who need daily hospitalization by a factor of 1/12. The simulations also indicate that both the timing and the intensity of the isolation enforcement are key for the evolution of the virus spread and the smoothing of the hospitalization needs.
Open Access
Business dynamism and economic growth: U.S. regional evidence
(2016) Casares Polo, Miguel; Khan, Hashmat; Economía; Ekonomia
We document empirical evidence on the determinants of U.S. regional growth over the last 25 years, with a special attention to the role of entrepreneurial activity or `business dynamism'. The main data source is the Business Dynamics Statistics (BDS) released by the U.S. Census Bureau. The key findings are: i) business entry and exit rates are similarly distributed across states, ii) neither entry nor exit rates have had a significant impact on regional growth, iii) higher business density results in faster regional growth, iv) entry rates have fallen over time and the states with greater business detrending have had weaker economic growth, v) states where entry and exit show substantial comovement (business churning) tend to grow faster, especially after 2007, vi) state-level population growth has no substantial effect on regional growth, and vii) the convergence hypothesis holds across the states of the U.S.
Open Access
A structural analysis of US entry and exit dynamics
(2018) Casares Polo, Miguel; Khan, Hashmat; Poutineau, Jean-Christophe; Economía; Ekonomia
The authors report empirical evidence indicating that US business formation has recently turned more volatile, procyclical and persistent due to changes in exit dynamics. To study these stylized facts, we estimate a DSGE model with endogenous entry and exit. Business units feature heterogeneous productivity and they shut down if the present value of expected future dividends falls below the current liquidation value. The estimation results imply structural changes in US exit dynamics after 2007: the semi-elasticity of the exit rate to critical productivity has increased and the average plant-level productivity has decreased.
Open Access
The timing and intensity of social distancing to flatten the COVID-19 curve: the case of Spain
(MDPI, 2020) Casares Polo, Miguel; Khan, Hashmat; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE; Economía
The continued spread of COVID-19 suggests a significant possibility of reimposing the lockdowns and stricter social distancing similar to the early phase of pandemic control. We present a dynamic model to quantify the impact of isolation for the contagion curves. The model is calibrated to the COVID-19 outbreak in Spain to study the effects of the isolation enforcement following the declaration of the state of alarm (14 March 2020). The simulations indicate that both the timing and the intensity of the isolation enforcement are crucial for the COVID-19 spread. For example, a 4-day earlier intervention for social distancing would have reduced the number of COVID-19 infected people by 67%. The model also informs us that the isolation enforcement does not delay the peak day of the epidemic but slows down its end. When relaxing social distancing, a reduction of the contagion probability (with the generalization of preventive actions, such as face mask wearing and hands sanitizing) is needed to overcome the effect of a rise in the number of interpersonal encounters. We report a threshold level for the contagion pace to avoid a second COVID-19 outbreak in Spain.
Open Access
The extensive margin and US aggregate fluctuations: a quantitative assessment
(Elsevier, 2020) Casares Polo, Miguel; Khan, Hashmat; Poutineau, Jean-Christophe; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE; Economía
We report empirical evidence indicating that US net business formation has recently turned more volatile, procyclical and persistent. To study these stylized facts, we estimate a DSGE model with endogenous entry and exit. Business units feature heterogeneous productivity and they shut down if the present value of expected future dividends falls below the current liquidation value. The model provides a better fit than a constant exit rate model with the fluctuations of US business formation. The introduction of the extensive margin amplifies the effects of technology and risk-premium shocks, and reduces the procyclicality of firm-level production. The main sources of variability of the US aggregate fluctuations during the Great Recession are countercyclical technology shocks, persistent adverse risk-premium shocks, and expansionary monetary policy shocks.
Open Access
Did US business dynamism recover in the 2010s?
(Elsevier, 2022) Aguilera Bravo, Asier; Casares Polo, Miguel; Khan, Hashmat; Ekonomia; Institute for Advanced Research in Business and Economics - INARBE; Economía
We provide evidence that both firm and establishment entry rates in the US have been increasing over the past decade, seemingly ending the decline observed over previous decades. However, neither the job creation and destruction rates nor the reallocation rates show signs of recovery. These conflicting features are reconciled after we control for the changes in job size of business units. As a result, we conclude that business dynamism flattened at historically low levels during the 2010s.