Energy in a Model of Firm Entry

Patra, Soma

doi:10.1017/s1365100518000159

Cited by 2 publications

(9 citation statements)

References 47 publications

(42 reference statements)

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“…A number of different measures of entry and exit have been used in the literature. Patra (2020) documents the negative impact of oil price shocks on net business formation. It also shows that net business formation is positively correlated (0.73) with GDP and negatively correlated (

-0.35

) with oil price increases as seen in figure 1.…”

Section: Firm Entry Exit and Oil Prices Empiricsmentioning

confidence: 99%

“…Previous work by Patra (2020) documents that there is a negative impact of higher oil prices on net business formation using VAR analysis. In this paper, I include measures of both firm entry and exit in my VAR models.…”

Section: Firm Entry Exit and Oil Prices Empiricsmentioning

confidence: 99%

“…Introducing energy in entry costs does not change the impulse responses significantly vis‐à‐vis the baseline model as shown in this paper. Another implication of the constant exit rate in Patra (2020) or Bilbiie et al (2012) is that it implies procyclical exit. As a result the model would predict higher firm exits due to a technology shock and lower firm exits due to an oil shock.…”

Section: Introductionmentioning

confidence: 99%

“…This includes work of Bilbiie et al (2012), Bergin and Corsetti (2008), Bilbiie et al (2007) and Lewis (2009). Patra (2020) considers oil price shocks and the amplification generated due to endogenous entry. However, in all these models, firms are homogeneous and the exit decision is exogenous.…”

Section: Introductionmentioning

confidence: 99%

“…Further, endogenizing the exit rate has a number of other advantages. Firstly, the amplification mechanism depends crucially on the specification of entry cost in Patra (2020). In particular, the model generates sufficient amplification only when entry costs have an energy component.…”

Section: Introductionmentioning

confidence: 99%

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Oil price shocks, firm entry and exit in a heterogeneous firm model

Patra

2022

Canadian J of Economics

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Oil price shocks are considered to be one of the important factors behind US recessions, yet little is known about the transmission channels of oil price shocks. What complicates the matter further is the small share of oil in production. To address the issue the literature has incorporated amplifying channels such as endogenous depreciation or variable markups. I build a DSGE model with heterogeneous firms and show that inclusion of firm entry and exit amplifies the effect of oil price shocks. Using US firm-level data, I see that oil shocks are negatively correlated with firm entry and positively correlated with firm exit as predicted by the model. Further, the DSGE model suggests it is the bigger and more-productive firms that survive after an oil price shock. Résumé. Chocs pétroliers et entrées et sorties du marché dans un modèle d'entrepriseshétérogènes. On estime que les chocs pétroliers font partie des principaux facteurs à l'origine des récessions aux États-Unis. Pourtant, on ne sait que peu de choses sur leurs canaux de transmission. La problématique se complique davantage si l'on considère la faible part du pétrole dans la production. Pour résoudre cette question, la littérature a intégré des canaux d'amplification, notamment des dépréciations endogènes ou des taux de marge variables. Dans cet article nous développons un modèle d'équilibre général dynamique stochastique avec entreprises hétérogènes pour montrer que la prise en compte des entrées et sorties d'entreprises amplifie l'effet des chocs pétroliers. Grâce à des données d'entreprises américaines, nous observons qu'en matière de chocs pétroliers, la corrélation est négative avec les entrées d'entreprises sur le marché mais positive avec les sorties, tel que prévu par le modèle. En outre, le modèle d'équilibre général dynamique stochastique suggère que les entreprises plus grandes et plus productives ont davantage tendance à survivre à un choc pétrolier.

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-0.35

) with oil price increases as seen in figure 1.…”

Section: Firm Entry Exit and Oil Prices Empiricsmentioning

confidence: 99%

Section: Firm Entry Exit and Oil Prices Empiricsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Oil price shocks, firm entry and exit in a heterogeneous firm model

Patra

2022

Canadian J of Economics

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Climate Policies, Labor Markets, and Macroeconomic Outcomes in Emerging Economies

Finkelstein-Shapiro¹,

Nuguer²

2023

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We study the labor market and macroeconomic effects of introducing a carbon tax in the energy sector in emerging economies (EMEs) by building a framework with equilibrium unemployment and firm entry that incorporates key elements of the distinct employment and firm structure of EMEs. Our model endogenizes the adoption of green energy-production technologies--a core element of policy discussions regarding the transition to a low-carbon economy. Calibrating the model to EME data, we show that a carbon tax fosters greater green technology adoption and increases the share of green energy produced. However, the tax leads to higher energy prices, which reduce salaried firm creation and formal employment and increase self-employment, labor participation, and unemployment. As a result, the tax generates output and welfare losses. Green technology adoption plays a key role in limiting the quantitative magnitude of these losses, while the response of self-employment is crucial to explaining the adverse labor market and macroeconomic effects of the policy. Given this finding, we show that a carbon tax coupled with a plausible reduction in the cost of becoming a formal firm can offset the adverse effects of the tax and generate a transition to a lower-carbon economy with minimal economic costs. Finally, we show that lowering green-technology adoption costs or the cost of green-energy production inputs--two alternative climate policies--reduces emissions while limiting the output and welfare costs compared to a carbon tax.

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Energy in a Model of Firm Entry

Cited by 2 publications

References 47 publications

Oil price shocks, firm entry and exit in a heterogeneous firm model

Oil price shocks, firm entry and exit in a heterogeneous firm model

Climate Policies, Labor Markets, and Macroeconomic Outcomes in Emerging Economies

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