Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
10437740 | Journal of Economic Behavior & Organization | 2005 | 26 Pages |
Abstract
This paper investigates whether the natural selection mechanism (NSM) of economic Darwinism works in severe recessions. Based on micro data, we constructed a comprehensive firm-level panel dataset for Japan from 1994 to 1998 to analyze a firm's entry, survival, and exit and its relationship with TFP. Empirical results show that efficient firms in terms of TFP exited while inefficient ones survived in the banking-crisis period of 1996-1997. Further, this phenomenon is observed mainly for new entrants and contributes substantially to a fall in macro TFP after 1996. These facts strongly suggest a malfunctioning of NSM in severe recessions.
Keywords
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Economics and Econometrics
Authors
Kiyohiko G. Nishimura, Takanobu Nakajima, Kozo Kiyota,