Author: Yoshihiro HashiguchiPublisher:
ISBN:
Category :
Languages : en
Pages :
Book Description
Firm Agglomeration and Aggregate Fluctuations
Author: Yoshihiro HashiguchiFirms, Destinations, and Aggregate Fluctuations
Author: Julian Di GiovanniPublisher:
ISBN:
Category : Business enterprises
Languages : en
Pages : 60
Book Description
This paper uses a database covering the universe of French firms for the period 1990--2007 to provide a forensic account of the role of individual firms in generating aggregate fluctuations. We set up a simple multi-sector model of heterogeneous firms selling to multiple markets to motivate a theoretically-founded decomposition of firms' annual sales growth rate into different components. We find that the firm-specific component contributes substantially to aggregate sales volatility, mattering about as much as the components capturing shocks that are common across firms within a sector or country. We then decompose the firm-specific component to provide evidence on two mechanisms that generate aggregate fluctuations from microeconomic shocks highlighted in the recent literature: (i) when the firm size distribution is fat-tailed, idiosyncratic shocks to large firms directly contribute to aggregate fluctuations; and (ii) aggregate fluctuations can arise from idiosyncratic shocks due to input-output linkages across the economy. Firm linkages are approximately three times as important as the direct effect of firm shocks in driving aggregate fluctuations.
Aggregate Fluctuations and the Cross-sectional Dynamics of Firm Growth
Author: Sean HollyCompositional Nature of Firm Growth and Aggregate Fluctuations
Author: Vladimir SmirnyaginEntry, Exit, Firm Dynamics, and Aggregate Fluctuations
Author: Gian Luca ClementiPublisher:
ISBN:
Category : Economics
Languages : en
Pages :
Book Description
Do firm entry and exit play a major role in shaping aggregate dynamics? Our answer is yes. Entry and exit propagate the effects of aggregate shocks. In turn, this results in greater persistence and unconditional variation of aggregate time-series. These are features of the equilibrium allocation in Hopenhayn (1992)'s model of equilibrium industry dynamics, amended to allow for investment in physical capital and aggregate fluctuations. In the aftermath of a positive productivity shock, the number of entrants increases. The new firms are smaller and less productive than the incumbents, as in the data. As the common productivity component reverts to its unconditional mean, the new entrants that survive become more productive over time, keeping aggregate efficiency higher than in a scenario without entry or exit.
Temporal Agglomeration
Author: The granular origins of aggregate fluctuations
Author: Xavier GabaixPublisher:
ISBN:
Category : Business cycles
Languages : en
Pages : 44
Book Description
This paper proposes that idiosyncratic firm-level fluctuations can explain an important part of aggregate shocks, and provide a microfoundation for aggregate productivity shocks. Existing research has focused on using aggregate shocks to explain business cycles, arguing that individual firm shocks average out in aggregate. I show that this argument breaks down if the distribution of firm sizes is fat-tailed, as documented empirically. The idiosyncratic movements of the largest 100 firms in the US appear to explain about one third of variations in output and the Solow residual. This "granular" hypothesis suggests new directions for macroeconomic research, in particular that macroeconomic questions can be clarified by looking at the behavior of large firms. This paper's ideas and analytical results may also be useful to think about the fluctuations of other economic aggregates, such as exports or the trade balance.
Heterogeneous Firms and the Micro Origins of Aggregate Fluctuations
Author: Glenn MagermanEssays on Aggregate Fluctuations with Micro-heterogeneity
Author: Tatsuro SengaPublisher:
ISBN:
Category :
Languages : en
Pages : 135
Book Description
In the second chapter, "Default Risk and Aggregate Fluctuations in an Economy with Production Heterogeneity," with Aubhik Khan and Julia K. Thomas, I study an economy where firms have persistent differences in productivities, capital, and debt or financial assets. Investment is funded by retained earnings and non-contingent debt. Because firms may default on their loans, the unit cost of borrowing rises with the debt a firm undertakes and falls with its collateral. This drives an inefficient allocation of capital; on average, large firms with more collateral invest more than do small firms with less collateral. In response to a credit shock worsening firms' cash positions, the model predicts a sharp response consistent with several aspects of the 2007 U.S. recession. Measured TFP falls over several periods, as do employment, investment and GDP. The subsequent recovery is gradual given slow recoveries in TFP, aggregate capital, and the measure and distribution of firms. In the third chapter, "Uncertainty Shocks and Liquidity Crisis with Adverse Selection," I study the impact of uncertainty shocks in an economy with asymmetric information in the asset market. Firms are heterogeneous in productivity, and they finance investment by issuing long-term, non-contingent loans. Each lender underwrites and securitizes loans in a market where households participate as buyers without knowing the quality of underlying assets. This adverse selection problem worsens following a shock to the dispersion of firm productivity. Trading volumes and the prices for securitized loans fall, and this in turn adversely affects investment at the firm level.
Author: Andrea Stella