Stylised facts and other empirical evidence on firm dynamics, business cycle and growth

Abstract

In this paper, we bring together, in a systematised fashion, the scattered empirical evidencerelating firm dynamics with both short-run and long-run macroeconomic dynamics. Thereare numerous studies that focus on firm-level data while controlling for macroeconomicconditions. From these studies a fairly robust set of empirical regularities pertaining toentry, exit, growth and the size distribution of firms has emerged. However, the literaturethat focuses explicitly on the interplay between firm dynamics and the business cycle isroughly confined to the US experience and to the cyclical properties of firm entry and exit,while the studies about the relationship between firm dynamics and economic growthare limited and unsystematic. We also give a brief account of the most recent theoreticalliterature on firm dynamics and macroeconomic dynamics, and try to relate it to theempirical findings.