| Number |
CREPEDP-167 |
| Publication Date |
February 2025 |
| Title |
Inter-Firm Network Growth over Firm Life Cycle and Its
Macroeconomic Implications |
| Authors |
Hiroyuki Asai and Makoto Nirei
|
| Abstract |
This paper investigates the network growth pattern of young firms and its macroeconomic
implications. Using panel data of firm-to-firm trade and financial surveys
in Japan, we show that young firms face delays in acquiring new partners, even after
accounting for typical age-dependent growth factors. To explain this pattern, we
develop a general equilibrium model incorporating dynamic network formation of heterogeneous
firms, distorted by an age-specific networking wedge. Using the calibrated
model, we identify the macroeconomic significance of the wedge. Elimination of the
wedge improves welfare by 2.4% by accelerating the network formation of young firms
and restructuring supply chains in the economy. |
| Keywords |
Firm Dynamics, Production Networks, Misallocation
|
| Other information |
Paper in English (51 pages) |