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Article
Inflation and Establishment Turnover
Eastern Economic Journal (2007)
  • Gaetano Antonolfi
  • David S. Kaplan, Instituto Tecnológico Autónomo de México
Abstract

We study a channel through which inflation can have effects on the real economy. Using job creation and destruction data from U.S. manufacturing establishments from 1973-1988, we show that both jobs created by new establishments and jobs destroyed by dying establishments are negatively correlated with inflation. These results are robust to controls for the real-business cycle and monetary policy. Over a longer time frame, data on business failures confirm our results obtained from job creation and destruction data. We show that a financial-markets explanation and a nominal-wage rigidities explanation are both consistent with our empirical evidence.

Keywords
  • Inflation,
  • Job Creation and Destruction,
  • Firm Turnover
Disciplines
Publication Date
Summer 2007
Citation Information
Gaetano Antonolfi and David S. Kaplan. "Inflation and Establishment Turnover" Eastern Economic Journal Vol. 33 Iss. 3 (2007)
Available at: http://works.bepress.com/david_kaplan/8/