Evidences from structural VAR show that new business formation positively co-moves with output under news shocks. The Jaimovich-Rebelo model augmented with firm dynamics can explain the empirical findings. The key assumption is endogenous survival rates for new entrants.

Evidences from structural VAR show that new business formation positively co-moves with output under news shocks. The Jaimovich-Rebelo model augmented with firm dynamics can explain the empirical findings. The key assumption is endogenous survival rates for new entrants.