Modeling Firm and Market Dynamics: A Flexible Model Reproducing Existing Stylized Facts on Firm Growth

摘要

This paper presents a model of firm and market dynamics that is able to reproduce the empirically observed patterns on firm growth and its statistical characteristics. It goes beyond the existing firm models by reproducing all stylized facts established in the literature. Furthermore, the model is flexible in the sense that various parameter settings are identified that reproduce the stylized facts. We identify and discuss different ranges of the model’s parameters that allow for adapting the model to certain industries and life-cycle stages.