JOB MARKET CANDIDATE
Research Interests: Macroeconomics, International Economics, Financial Economics
(Expected) Graduation: May 2018
- Nicola Gennaioli: email@example.com
- Tommaso Monacelli: firstname.lastname@example.org
- Stefano Rossi: email@example.com
- Fabio Sdogati: firstname.lastname@example.org
Phone: (+39) 02 5836 5195
Mobile: (+39) 339 8467906
JOB MARKET PAPER
Operating leverage and the decline in business dynamism
Operating leverage is the share of fixed over total operating costs. I document its increase among U.S. listed firms over the last forty years and show that, behind this pattern, lies the entry of innovation-intensive firms that have larger R&D expenditures, more patents, and more volatile sales. Operating leverage is estimated through the error correction model, which builds over the standard methodology of costs elasticity with respect to sales. I then argue that larger fixed costs are consistent with the recent decline in business dynamism, from the perspective of a standard heterogeneous firms model: a lower number of firms that enter and survive upon entry. This prediction is indeed consistent with long-term industry patterns. If innovation brings upon larger fixed costs, by its nature, then it also comes naturally a lower level of business dynamism.
“Effects of Currency Devaluations on the Economic Growth in Developing Countries: The Role of Foreign Currency–Denominated Debt,” Atlantic Economic Journal, 40(2), 191-209, with Silvia Sicouri (2012).