A Short Course On Firm Dynamics

A Short Course On Firm Dynamics


This course is aimed at providing an introduction into general equilibrium macroeconomic models with firm dynamics. In doing so, we will cover several seminal contributions in the area, use state-of-the-art solution techniques for heterogeneous agent models to analyze these models and also discuss how such models can be (partly) estimated.

The course consists of lectures where we will develop the theoretical models and discuss the approach of how to solve them. In addition to lectures, the course also includes tutorial sessions. These are intended to allow students to program their own code solving the models discussed during the lectures.



Monday 26th August 2019

Tuesday 27th August 2019

9:00am – 12:30pm

Fred Gruen Seminar Room, HW Arndt Building 25A ANU

Fred Gruen Seminar Room, HW Arndt Building 25A ANU

12:30pm – 1:30pm

Lunch Break

Lunch Break

1:30pm – 4:00pm

Computer Lab Session COP G020, Copland Building (#24)

Computer Lab Session COP G020, Copland Building (#24)

Morning Tea and Lunch will be provided.


1.  Baseline models
Introduction to the course, motivating facts on firm dynamics and their link to the macroeconomy. TA session: solving a simple firm dynamics model without aggregate uncertainty.

Suggested reading

Haltiwanger, Jarmin, Miranda (2013): Who creates jobs? Small vs Large vs Young, Review of Economics and Statistics

Hopenhayn (1992): Entry, exit and firm dynamics in long run equilibrium, Econometrica.

Hopenhayn, Rogerson (1993): Job turnover and policy evaluation: A general equilibrium analysis, Journal of Political Economy.

2. Misallocation

Aggregate consequences of firm-level distortions. Evidence on misallocation, implications for cross-country differences in income and possible sources of misallocation. TA session: solve heterogeneous firm model with micro-frictions.

Suggested reading

Hsieh, Klenow (2009): Misallocation and manufacturing TFP in China and India, Quarterly Journal of Economics.

Midrigan, Xu (2014): Finance and misallocation: Evidence from plant-level data, American Economic Review.

3. Aggregate fluctuations

Importance of firm dynamics for aggregate fluctuations. Lost generations of firms, persistent effects of recessions and propagation of shocks. TA session: solve (and partly estimate) firm-dynamics model with aggregate uncertainty.

Suggested reading

Clementi, Palazzo (2016): Entry, exit, firm dynamics and aggregate fluctuations, American Economic Journal: Macroeconomics.

Sedlacek, Sterk (2017): The growth potential of startups over the business cycle, American Economic Review.

Sedlacek (2019): Lost generation of firms and aggregate labor market dynamics, Journal of Monetary Economics.


Registration is open to ANU Academic Staff, PhD's, Masters Students and Department of Treasury and PMC Researchers. Places in this course are limited and will be on a first come first served basis

Please email Enquiries.rse@anu.edu and include your Full Name, Organisation, Position, and Dietary requirements. Your place in the course is not confirmed until you receive confirmation by return email.

Start date:

9am Monday, 26 Aug 2019

End date:

4pm Tuesday, 27 Aug 2019


Fred Gruen Seminar Room, HW Arndt Building ANU


Professor Petr Sedlacek, University of Oxford


Nicole Millar

Updated:   7 August 2019 / Responsible Officer:  CBE Communications and Outreach / Page Contact:  College Web Team