We disentangle the contribution of unobserved heterogeneity in demand and productivity to firm growth using Italian data containing unique information on firm-level prices. Demand and total factor productivity (TFP) shocks are equally important in shaping firm growth. However, the pass-through of shocks to growth is highly incomplete, more so for productivity shocks. We argue that incompleteness and asymmetry of the pass-through can be explained by frictions that, unlike those studied by the literature on factor misallocation, have differential effects according to the nature of the shock. We propose hurdles to firms' ability to reorganize as an example of these types of frictions.

Demand or productivity: what determines firm growth? / Andrea, Pozzi; Schivardi, Fabiano. - In: RAND JOURNAL OF ECONOMICS. - ISSN 0741-6261. - 47:3(2016), pp. 608-630. [10.1111/1756-2171.12142]

Demand or productivity: what determines firm growth?

SCHIVARDI, FABIANO
2016

Abstract

We disentangle the contribution of unobserved heterogeneity in demand and productivity to firm growth using Italian data containing unique information on firm-level prices. Demand and total factor productivity (TFP) shocks are equally important in shaping firm growth. However, the pass-through of shocks to growth is highly incomplete, more so for productivity shocks. We argue that incompleteness and asymmetry of the pass-through can be explained by frictions that, unlike those studied by the literature on factor misallocation, have differential effects according to the nature of the shock. We propose hurdles to firms' ability to reorganize as an example of these types of frictions.
Economics and Econometrics
Demand or productivity: what determines firm growth? / Andrea, Pozzi; Schivardi, Fabiano. - In: RAND JOURNAL OF ECONOMICS. - ISSN 0741-6261. - 47:3(2016), pp. 608-630. [10.1111/1756-2171.12142]
File in questo prodotto:
File Dimensione Formato  
Proofs rand_12142_Rev_EV.pdf

Open Access

Tipologia: Documento in Pre-print
Licenza: DRM non definito
Dimensione 296.24 kB
Formato Adobe PDF
296.24 kB Adobe PDF Visualizza/Apri
11385-173894.pdf

Solo gestori archivio

Tipologia: Versione dell'editore
Licenza: DRM non definito
Dimensione 273.04 kB
Formato Adobe PDF
273.04 kB Adobe PDF   Visualizza/Apri
Pubblicazioni consigliate

Caricamento pubblicazioni consigliate

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11385/173894
Citazioni
  • Scopus 23
  • ???jsp.display-item.citation.isi??? 26
social impact