Economic fluctuations and market imperfections: the role of job and firm entry-exit flows.

Summary The objective of this thesis is to study the role of employment and firm entry-exit flows in the dynamics of the business cycle. More specifically, this work aims to show the effects of these reallocation flows in the presence of frictions in the labor and capital markets. In the first chapter, written in collaboration with F. Pappadà, we highlight a new amplification channel associated with credit constraints. The theoretical model we propose predicts that the recession causes a more pronounced fall in aggregate output in the presence of credit constraints due to a higher rate of firm destruction. The second chapter focuses on the role of reallocation flows in the dynamics of aggregate productivity. Unlike the usual decompositions, the method we propose allows us to measure the contribution of changes in allocative efficiency. Estimated on French data over the period 1991-2006, this decomposition indicates that recessions contribute to improving aggregate productivity through an improvement in resource allocation. The last chapter, the result of a collaboration with J-Q Hairault and F. Langot, examines the consequences of economic fluctuations on the well-being of economic agents. In the presence of matching frictions, we show that economic fluctuations increase the average level of unemployment. Fluctuations are then costly, not only because of households' aversion to volatility, but also because of the indirect consequences of this volatility on the average level of consumption.