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Research#

Working Papers#

  • "Not-So-Cleansing Recessions," with Frederik Bennhoff and Alessandro Ferrari, 2024.
    Draft coming soon.Slides
    Summary
    Main Figure of Bajo et al. (2024)

    Recessions are periods in which the least productive firms in the economy exit, and as the economy recovers, they are replaced by new and more productive entrants. These cleansing effects imply that business cycles generate improvements in the average firm productivity. We argue that this is not sufficient to induce long-run gains in GDP and welfare. We show that these are driven by the intensity of love-of-variety in aggregate production. If industry output is aggregated with the standard CES aggregator, recessions do not bring about any improvement in GDP and welfare. If the economy features more love-of-variety than CES, the social planner finds it optimal to subsidize economic activity in recessions to avoid firm exit.

Work in Progress#

  • "Local stock markets," with Charles Parry.
  • "Information disclosure and firm entry," with Fulvia Oldrini.
  • "Wealth inequality, concentration, and markups," with Frederik Bennhoff and Jason Blunier.