Firm entry is a fundamental indicator of economic activity. Typically firm entry is procyclical: it rises in booms and declines in recessions. However, during the COVID-19 recession, the entry has been countercyclical, rising as output falls. Motivated by this observation, The Bank of England analyses the dynamics behind firm creation in the UK during the COVID-19 pandemic, investigates the drivers of firm creation, and asks whether these new firms affect the real economy. A fascinating read.
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