Exit dynamics of start-up firms: does profit matter?:
We estimate by means of indirect inference a structural economic model where firms’ exit and investment decisions are the solution to a discrete-continuous dynamic programming problem. In the model the exit probability depends on the current capital stock and a measure of short-run profitability, wh...
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| Hauptverfasser: | , |
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| Format: | Elektronisch E-Book |
| Sprache: | English |
| Veröffentlicht: |
[München]
Center for Economic Studies & Ifo Institute
January 2015
|
| Schriftenreihe: | CESifo working paper
no. 5172 : Category 12: Empirical und theoretical methods |
| Online-Zugang: | kostenfrei |
| Zusammenfassung: | We estimate by means of indirect inference a structural economic model where firms’ exit and investment decisions are the solution to a discrete-continuous dynamic programming problem. In the model the exit probability depends on the current capital stock and a measure of short-run profitability, where the latter is a state variable which is unobserved to the econometrician. We estimate the model on all start-up firms in the Norwegian manufacturing sector during 1994 - 2012, and find that both increased short-run profitability and a higher capital stock lowers the exit probability - this effect is statistically significant in all industries. We show that the difference in annual exit probability between firms that exited during the observation period and firms that did not exit is highly persistent over time, and there is no tendency for a sharp increase in the estimated exit probability just prior to exit. Hence, it is the cumulated effect of higher risk of exit over several years - compared with the average firm - that causes exits. |
| Beschreibung: | 1 Online-Ressource (47 Seiten) Diagramme |
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| 490 | 1 | |a CESifo working paper |v no. 5172 |a Category 12: Empirical und theoretical methods | |
| 520 | 1 | |a We estimate by means of indirect inference a structural economic model where firms’ exit and investment decisions are the solution to a discrete-continuous dynamic programming problem. In the model the exit probability depends on the current capital stock and a measure of short-run profitability, where the latter is a state variable which is unobserved to the econometrician. We estimate the model on all start-up firms in the Norwegian manufacturing sector during 1994 - 2012, and find that both increased short-run profitability and a higher capital stock lowers the exit probability - this effect is statistically significant in all industries. We show that the difference in annual exit probability between firms that exited during the observation period and firms that did not exit is highly persistent over time, and there is no tendency for a sharp increase in the estimated exit probability just prior to exit. Hence, it is the cumulated effect of higher risk of exit over several years - compared with the average firm - that causes exits. | |
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| illustrated | Not Illustrated |
| indexdate | 2024-07-10T07:31:38Z |
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| language | English |
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| series2 | CESifo working paper Category 12: Empirical und theoretical methods |
| spelling | Golombek, Rolf 1959- Verfasser (DE-588)170275728 aut Exit dynamics of start-up firms: does profit matter? Rolf Golombek, Arvid Raknerud [München] Center for Economic Studies & Ifo Institute January 2015 1 Online-Ressource (47 Seiten) Diagramme txt rdacontent c rdamedia cr rdacarrier CESifo working paper no. 5172 Category 12: Empirical und theoretical methods We estimate by means of indirect inference a structural economic model where firms’ exit and investment decisions are the solution to a discrete-continuous dynamic programming problem. In the model the exit probability depends on the current capital stock and a measure of short-run profitability, where the latter is a state variable which is unobserved to the econometrician. We estimate the model on all start-up firms in the Norwegian manufacturing sector during 1994 - 2012, and find that both increased short-run profitability and a higher capital stock lowers the exit probability - this effect is statistically significant in all industries. We show that the difference in annual exit probability between firms that exited during the observation period and firms that did not exit is highly persistent over time, and there is no tendency for a sharp increase in the estimated exit probability just prior to exit. Hence, it is the cumulated effect of higher risk of exit over several years - compared with the average firm - that causes exits. Raknerud, Arvid Verfasser (DE-588)171429060 aut CESifo working paper no. 5172 : Category 12: Empirical und theoretical methods (DE-604)BV014083264 5172 https://www.cesifo.org/DocDL/cesifo1_wp5172.pdf Verlag kostenfrei Volltext |
| spellingShingle | Golombek, Rolf 1959- Raknerud, Arvid Exit dynamics of start-up firms: does profit matter? CESifo working paper |
| title | Exit dynamics of start-up firms: does profit matter? |
| title_auth | Exit dynamics of start-up firms: does profit matter? |
| title_exact_search | Exit dynamics of start-up firms: does profit matter? |
| title_full | Exit dynamics of start-up firms: does profit matter? Rolf Golombek, Arvid Raknerud |
| title_fullStr | Exit dynamics of start-up firms: does profit matter? Rolf Golombek, Arvid Raknerud |
| title_full_unstemmed | Exit dynamics of start-up firms: does profit matter? Rolf Golombek, Arvid Raknerud |
| title_short | Exit dynamics of start-up firms: does profit matter? |
| title_sort | exit dynamics of start up firms does profit matter |
| url | https://www.cesifo.org/DocDL/cesifo1_wp5172.pdf |
| volume_link | (DE-604)BV014083264 |
| work_keys_str_mv | AT golombekrolf exitdynamicsofstartupfirmsdoesprofitmatter AT raknerudarvid exitdynamicsofstartupfirmsdoesprofitmatter |