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Federal Reserve Bank of San Francisco
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Institutional Affiliation: Federal Reserve Bank of San Francisco
NBER Working Papers and Publications
|November 2019||A Theory of Falling Growth and Rising Rents|
with Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter J. Klenow: w26448
Growth has fallen in the U.S., while firm concentration and profits have risen. Meanwhile, labor’s share of national income is down, mostly due to the rising market share of low labor share firms. We propose a theory for these trends in which the driving force is falling firm-level costs of spanning multiple markets, perhaps due to accelerating IT advances. In response, the most efficient firms (with higher markups) spread into new markets, thereby generating a temporary burst of growth. Because their efficiency is difficult to imitate, less efficient firms find markets more difficult to enter profitably and therefore innovate less. Eventually, due to greater competition from efficient firms, within-firm markups actually fall. Despite the increase in the aggregate markup and rents, firm in...
|November 2017||Missing Growth from Creative Destruction|
with Philippe Aghion, Antonin Bergeaud, Timo Boppart, Peter J. Klenow: w24023
Statistical agencies typically impute inflation for disappearing products based on surviving products, which may result in overstated inflation and understated growth. Using U.S. Census data, we apply two ways of assessing the magnitude of “missing growth” for private nonfarm businesses from 1983–2013. The first approach exploits information on the market share of surviving plants. The second approach applies indirect inference to firm-level data. We find: (i) missing growth from imputation is substantial — at least 0.6 percentage points per year; and (ii) most of the missing growth is due to creative destruction (as opposed to new varieties).
Published: Philippe Aghion & Antonin Bergeaud & Timo Boppart & Peter J. Klenow & Huiyu Li, 2019. "Missing Growth from Creative Destruction," American Economic Review, vol 109(8), pages 2795-2822. citation courtesy of