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New Business Start-ups and the Business Cycle

Coles, M and Kelishomi, AM (2011) New Business Start-ups and the Business Cycle. UNSPECIFIED. CEPR Discussion Papers.

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Abstract

This paper considers new business start-up activity within a stochastic equilibrium model of unemployment. The resulting job creation process is both natural and tractable, and generates equilibrium unemployment and vacancy dynamics which match the volatility and persistence observed in the data. The insight is that the standard Diamond/Mortensen/Pissarides matching framework works beautifully once the free entry of vacancies assumption is replaced by a model of business start-up activity. The approach is particularly important as it is demonstrated that a large part of net job creation in the U.S. economy can be attributed to new business start-ups.

Item Type: Monograph (UNSPECIFIED)
Uncontrolled Keywords: aggregate dynamics; equilibrium unemployment; startups
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences > Economics, Department of
Depositing User: Jim Jamieson
Date Deposited: 05 Jan 2013 17:52
Last Modified: 17 Aug 2017 18:04
URI: http://repository.essex.ac.uk/id/eprint/4924

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