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Firm Performance, Business Supports and Zombification over the Pandemic

Author

Listed:
  • Alexander Amundsen
  • Amélie Lafrance-Cooke
  • Danny Leung

Abstract

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.

Suggested Citation

  • Alexander Amundsen & Amélie Lafrance-Cooke & Danny Leung, 2025. "Firm Performance, Business Supports and Zombification over the Pandemic," IMF Working Papers 2025/029, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2025/029
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