Course type
IWH-DPE Elective Course (Macro & Productivity Topic Track); Special Course
Lecturers
Professor Dr Javier Miranda (IWH, FSU) and Professor Dr Pedro Armada (IWH, FSU)
Summary
This course examines firm dynamics and their implications for aggregate productivity growth and macroeconomic outcomes. The main goal is to prepare students to conduct independent research on firm dynamics and quantitative macro. We cover: (i) the basic empirical facts on firm entry, exit, size, age, and productivity heterogeneity; (ii) measurement and estimation of firm-level productivity and markups; (iii) recent trends in business dynamism, including declining entry rates and rising concentration; (iv) the canonical heterogeneous-firm models that rationalize these facts, and (v) firms, misallocation, and aggregate productivity. Students will read and critically assess recent papers and develop skills in quantitative macro modelling.
Schedule
03.06.2026 10:30-12:00 IWH, Leipziger Str. 100, 3rd floor, Conference Room
17.06.2026 10:30-12:00 IWH, Leipziger Str. 100, 3rd floor, Conference Room
01.07.2026 10:30-12:00 IWH, Leipziger Str. 100, 3rd floor, Conference Room
15.07.2026 10:30-12:00 IWH, Leipziger Str. 100, 3rd floor, Conference Room
Content
1. Empirical Facts on Firm Dynamics
2. Canonical Models of Firm Dynamics
3. Declining Dynamism, Diffusion, and Demographics
4. Resource Allocation and Aggregate Productivity
Course requirements
Participation: Students are expected to read all required papers before each session and actively participate in discussions. Critical engagement with the papers is essential.
In addition, they select one paper from the supplementary reading list and write a 3–5 page referee report evaluating its contribution, methodology, and potential extensions.
Finally, students give a 15-minute presentation of an original research idea connected to any topic covered in the course. The proposal should include motivation, a clear research question, a sketch of the methodology, and anticipated contribution.
Required Reading
There is no required textbook. For background, the following survey articles provide useful entry points:
Hopenhayn, H. (2014). “Firms, Misallocation, and Aggregate Productivity: A Review.” Annual Review of Economics, 6: 735–770.
Restuccia, D. and R. Rogerson (2017). “The Causes and Costs of Misallocation.” Journal of Economic Perspectives, 31(3): 151–174.
DeLoecker, J. and C. Syverson (2021). “An Industrial Organization Perspective on Produc tivity.” In Handbook of Industrial Organization, Vol. 4, Elsevier.
1. Empirical Facts on Firm Dynamics:
Decker, R., J. Haltiwanger, R. Jarmin, and J. Miranda (2014). “The Role of En trepreneurship in US Job Creation and Economic Dynamism.” Journal of Economic Perspectives, 28(3): 3–24.
Haltiwanger, J., R. Jarmin, and J. Miranda (2013). “Who Creates Jobs? Small versus Large versus Young.” Review of Economics and Statistics, 95(2): 347–361.
Foster, L., J. Haltiwanger, and C.J. Krizan (2001). “Aggregate Productivity Growth: Lessons from Microeconomic Evidence.” In New Developments in Productivity Analysis, NBER/University of Chicago Press.
Foster, L., J. Haltiwanger, and C.J. Krizan (2006). “Market Selection, Reallocation, and Restructuring in the U.S. Retail Trade Sector in the 1990s.” Review of Economics and Statistics, 88(4): 748–758.
Foster, L., J. Haltiwanger, and C. Syverson (2008). “Reallocation, Firm Turnover, and Efficiency: Selection on Productivity or Profitability?” American Economic Review, 98(1): 394–425.
2. Canonical Models of Firm Dynamics
Jovanovic, B. (1982). “Selection and the Evolution of Industry.” Econometrica, 50(3): 649–670.
Mokyr, Joel. “Long‑Term Economic Growth and the History of Technology.” In Handbook of Economic Growth, Vol. 1B, edited by Philippe Aghion and Steven N. Durlauf, 1113–1180. Amsterdam: Elsevier, 2005.
Hopenhayn, H. (1992). “Entry, Exit, and Firm Dynamics in Long Run Equilibrium.” Economerica, 60(5): 1127–1150.
Hopenhayn, H. and R. Rogerson (1993). “Job Turnover and Policy Evaluation: A General Equilibrium Analysis.” Journal of Political Economy, 101(5): 915–938.
Melitz, M. (2003). “The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity.” Econometrica, 71(6): 1695–1725.
Klette, T. and S. Kortum (2004). “Innovating Firms and Aggregate Innovation.” Journal of Political Economy, 112(5): 986–1018.
3. Declining Dynamism, Diffusion, and Demographics
Decker, R., J. Haltiwanger, R. Jarmin, and J. Miranda (2020). “Changing Business Dynamism and Productivity: Shocks versus Responsiveness.” American Economic Review, 110(12): 3952–3990.
Akcigit, U. and S. Ates (2021). “Ten Facts on Declining Business Dynamism and Lessons from Endogenous Growth Theory.” American Economic Journal: Macroeconomics, 13(1): 257–298.
Hopenhayn, H., J. Neira, and R. Singhania (2022). “From Population Growth to Firm Demographics: Implications for Concentration, Entrepreneurship and the Labor Share.” Econometrica, 90(4): 1879–1914.
Karahan, F., B. Pugsley, and A. Şahin (2024). “Demographic Origins of the Start-up Deficit.” American Economic Review, 114(7): 1986–2023.
4. Resource Allocation and Aggregate Productivity
Restuccia, D. and R. Rogerson (2008). “Policy Distortions and Aggregate Productivity.” Review of Economic Dynamics, 11(4): 707–720.
Hsieh, C.-T. and P. J. Klenow (2009). “Misallocation and Manufacturing TFP in China and India.” Quarterly Journal of Economics, 124(4): 1403–1448.
Buera, F. J., J. P. Kaboski, and Y. Shin (2011). “Finance and Development: A Tale of Two Sectors.” American Economic Review, 101(5): 1964–2002.
Restuccia, D. and R. Rogerson (2013). “Misallocation and Productivity.” In Handbook of Economic Growth, Volume 2, Elsevier.
Midrigan, V. and D. Y. Xu (2014). “Finance and Misallocation: Evidence from Plant Level Data.” American Economic Review, 104(2): 422–458.
Gopinath, G., Ş. Kalemli-Özcan, L. Karabarbounis, and C. Villegas-Sanchez (2017). “Capital Allocation and Productivity in South Europe.” Quarterly Journal of Eco nomics, 132(4): 1915–1967.
Bils, M., P. J. Klenow, and C. Ruane (2021). “Misallocation or Mismeasurement?” Quarterly Journal of Economics, 136(2): 651–699.
Registration
Please register for the course until May 31, 2026 by sending an e-mail to cgde@iwh-halle.de.