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Firm Performance, Business Supports and Zombification over the Pandemic
Author:
Alexander Amundsen
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Amélie Lafrance-Cooke
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Danny Leung
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Series:
IMF Working Papers
Volume/Issue:
Volume 2025: Issue 029
Language:
English
Publication Date:
31 Jan 2025
DOI:
https://doi.org/10.5089/9798400298776.001
ISBN:
9798400298776
ISSN:
1018-5941
Pages:
40
Keywords:
Zombie Firms; Aggregate Productivity; COVID-19 Pandemic; zombie firm; business support measure; cleansing effect; firm performance; exit component; COVID-19; Productivity; Employment; Europe
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Did the COVID-19 pandemic zombify the economy? Commentators have pointed to the pandemic and related business support measures potentially fueling zombification. Using administrative data covering the universe of Canadian firms, we find a broad-based decline in the share of zombie firms across industries relative to pre-pandemic levels. Whereas business support measures kept firms alive and operating as non-zombie firms, the decline in the zombie firm share was caused by would-be zombie firms exiting, indicative of the pandemic’s cleansing effects. As a consequence, while aggregate labour productivity worsened in Canada over the pandemic, it was not driven by zombie firms.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund