On the Mechanics of Firm Growth ERZO

  title={On the Mechanics of Firm Growth ERZO},
  author={G. J. LUTTMER},
  • Published 2016
The Pareto-like tail of the size distribution of firms can arise from random growth of productivity or stochastic accumulation of capital. If the shocks that give rise to firm growth are perfectly correlated within a firm, then the growth rates of small and large firms are equally volatile, contrary to what is found in the data. If firm growth is the result of many independent shocks within a firm, it can take hundreds of years for a few large firms to emerge. This paper describes an economy… CONTINUE READING

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