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International trade, non-trading firms and their impact on labour productivity.

Millard, S and Nicolae, A. and Nower, M. (2019) 'International trade, non-trading firms and their impact on labour productivity.', Working Paper. Bank of England, London.


In this paper we examine the impact of non-trading firms on labour productivity and its persistence in response to macroeconomic shocks, through their entry and exit into the domestic market, in a model with monopolistic competition and heterogeneous firms. We quantify the effects of various macroeconomic shocks on labour productivity and we demonstrate that non-trading domestic firms’ entry and exit into the domestic market explains the persistence of labour productivity in response to transitory shocks. We also show that the model successfully replicates the sluggish recovery of labour productivity in the United Kingdom since the Great Recession.

Item Type:Monograph (Working Paper)
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Publisher statement:Report deposited with kind permission of the Royal Bank of England.
Date accepted:15 April 2019
Date deposited:07 May 2019
Date of first online publication:15 April 2019
Date first made open access:No date available

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