The paper studies with an endogenous growth model how the merger and acquisition (M&A) affects the aggregate growth rate. We model the M&A as a capital reallocation process, which can increase both productivity and growth rates of firms. The model is tractable and greatly consistent with patterns observed in the M&A at the micro level. Matching our model to the data, we find that prohibiting the M&A would lead to the reduction of the aggregate growth rate of US economy by 0.1% and the reduction of the aggregate TFP by 5%.
Growth, Merger and acquisition, Knowledge spillover, Matching, Complementarity, Capital reallocation
Growth and Development | International Economics
Journal of Economic Dynamics and Control
Growing through the merger and acquisition. (2017). Journal of Economic Dynamics and Control. 80, 54-74. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/2050
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