Portrait of Dr Anthony Savagar

Dr Anthony Savagar

Lecturer in Macroeconomics


Anthony Savagar is a Lecturer in Macroeconomics and joined the University of Kent in 2016.

Research interests

Anthony's research covers macroeconomics, industrial organisation and dynamical systems, and looks at how firm behaviour and industrial organisation aggregate to affect business cycle dynamics.

His recent work analyses the contrasting productivity effects of firm entry fostering competition versus degrading returns to scale.

Anthony is a member of the Macroeconomics, Growth and History Centre (MaGHiC).



Administrative roles

  • Research Seminar Series Co-ordinator



  • Savagar, A. and Dixon, H. (2020). Firm Entry, Excess Capacity and Endogenous Productivity. European Economic Review [Online] 121:103339. Available at: https://doi.org/10.1016/j.euroecorev.2019.103339.
    We show that sluggish firm entry causes productivity to vary endogenously in response to technology shocks. The endogenous productivity effect is caused by incumbent firms utilizing excess capacity as entry adjusts. We develop a nonparametric model of endogenous sunk costs and monopolistic competition to show that imperfect competition and dynamic entry are necessary and jointly sufficient conditions for endogenous productivity fluctuations. Quantitatively we show the endogenous productivity effect is as large as that from a traditional `capital utilization' erect.


  • Savagar, A. (2018). Measured Productivity With Endogenous Markups and Economic Profits. University of Kent. Available at: https://ideas.repec.org/p/ukc/ukcedp/1812.html.
    I develop a model of dynamic firm entry, oligopolistic competition and returns to scale in order to decompose TFP fluctuations into technical change, economic profit and markup fluctuations. I show that economic profits cause short-run upward bias in measured TFP, but this subsides to upward bias from endogenous markups as firm entry adjusts. I analyze dynamics analytically through a nonparametric DGE model that allows for a perfect competition equilibrium such that there are no biases in measured TFP. Given market power, simulations show that measured TFP is 40% higher than technology in the short-run, due solely to profits, and 20% higher in the long-run due solely to markups. During transition both effects contribute upward bias: initially the profit effect dominates, but by 5 quarters the two effects contribute equally, and by 10 quarters only the markup effect persists. The speed of firm adjustment ('business dynamism') will determine these timings and therefore the importance of each bias.
  • Savagar, A. (2017). Firm Dynamics, Dynamic Reallocation, Variable Markups, and Productivity Behaviour. University of Kent Working Paper Series. Available at: https://ideas.repec.org/p/ukc/ukcedp/1713.html.
    I analyze two opposing effects of firm dynamics on productivity over the business cycle. Consider net exit, on the one hand it reallocates resources to incumbents whose productivity improves through scale economies, on the other hand it reduces the competitive pressure incumbents face which depresses productivity. Contrarily net entry strengthens competition, thus increasing productivity, but worsens incumbents' scale economies, thus decreasing productivity. I outline a theory that focuses on two industrial features (1) slow firm entry/exit and (2) firm pricing that depends on the number of competitors. In this environment a negative shock strikes incumbents due to slow exit responses. This weakens their scale thus worsening productivity but the effect recedes as exit occurs which reallocates resources to incumbents. However, the remaining firms face fewer competitors and thus charge higher markups which damages productivity. I analyze this trade-off between productivity improving resource reallocation and productivity degrading market power, by developing a continuous time, analytically tractable DGE model of endogenous firm entry/exit and endogenous markups.


  • Aloi, M., Dixon, H. and Savagar, A. (2019). Labour Responses, Regulation and Business Churn. Journal of Money, Credit and Banking [Online]. Available at: https://doi.org/10.1111/jmcb.12694.
    We develop a model of sluggish firm entry to explain short-run labor responses to technology shocks. We show that the labor response to technology and its persistence depend on the degree of returns to labor and the rate of firm entry. Existing empirical results support our theory based on short-run labor responses across US industries. We derive closed-form transition paths that show the result occurs because labor adjusts instantaneously whilst firms are sluggish, and closed-form eigenvalues show that stricter entry regulation results in slower convergence to steady state. Finally we show that our theoretical results hold in a quantitative model with capital accumulation and interest rate dynamics.
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