• Table of Contents
    • Abstract
    • Keywords
    • Article
      • Recent evidence on the pace of creative destruction
      • Recent evidence on the cyclical features of creative destruction
      • Recent evidence on institutional impediments to creative destruction and their cost
      • Final remarks
    • See Also
    • Bibliography
    • How to cite this article

creative destruction

Ricardo J. Caballero
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
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Abstract

Creative destruction refers to the incessant product and process innovation mechanism by which new production units replace outdated ones. This restructuring process permeates major aspects of macroeconomic performance, not only long-run growth but also economic fluctuations, structural adjustment and the functioning of factor markets. Over the long run, the process of creative destruction accounts for over 50 per cent of productivity growth. At business cycle frequency, restructuring typically declines during recessions, and this add a significant cost to downturns. Obstacles to the process of creative destruction can have severe short- and long-run macroeconomic consequences.
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Keywords

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Article

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How to cite this article

Caballero, Ricardo J. "creative destruction." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 18 October 2017 <http://pde-aux1.pde.pm.semcs.net/article?id=pde2008_C000421> doi:10.1057/9780230226203.0337

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