Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/311801 
Year of Publication: 
2024
Series/Report no.: 
Bank of Canada Staff Working Paper No. 2024-51
Publisher: 
Bank of Canada, Ottawa
Abstract: 
We investigate the macroeconomic impacts of mothballed businesses-those that closed temporarily-on sectoral equilibrium prices after a negative demand shock. First, we introduce a new establishment-level dataset derived from Google Places. We confirm the importance of temporary closures during the COVID-19 pandemic. Data on establishment reviews also suggests that preventing productive businesses from permanently exiting could support employment. Second, we embed these findings into a model of heterogeneous firm dynamics. By maintaining productive capacity during downturns, temporary closures initially support employment and subsequently reduce price pressures. Our results suggest that pandemic fiscal support for temporary closures may have eased inflationary pressures.
Subjects: 
Central bank research
Firm dynamics
Fiscal policy
Inflation and prices
JEL: 
D22
E32
C55
C81
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.