Do Firm-Level Shocks Generate Aggregate Fluctuations? A Cross-Country Analysis

Lin Shuheng () and Pérez Francisca ()
Additional contact information
Lin Shuheng: The Hong Kong Polytechnic University, Kowloon, Hong Kong
Pérez Francisca: Business School, 549476 Adolfo Ibanez University , Santiago, Chile

The B.E. Journal of Macroeconomics, 2025, vol. 25, issue 1, 45-79

Abstract: This paper tests the granular hypothesis introduced by Gabaix (2011. “The Granular Origins of Aggregate Fluctuations.” Econometrica 79 (3): 733–72) in the US, Germany, Canada, France, Japan, and the UK. We find that firm-level idiosyncratic shocks significantly impact aggregate fluctuations in only three of the six countries analyzed. Compared to the US, Japan and Germany, the UK, France, and Canada show greater granularity, but also a negligible firm-level contribution to aggregate volatility. Additional results look at the role of the transportation sector as a potential driver of granular effects in the US, Germany and Japan.

Keywords: idiosyncratic shocks; aggregate fluctuations; firm size distribution; granular hypothesis (search for similar items in EconPapers)
JEL-codes: D21 E32 O40 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1515/bejm-2024-0017 (text/html)
For access to full text, subscription to the journal or payment for the individual article is required.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bpj:bejmac:v:25:y:2025:i:1:p:45-79:n:1002

Ordering information: This journal article can be ordered from
https://www.degruyte ... ournal/key/bejm/html

DOI: 10.1515/bejm-2024-0017

Access Statistics for this article

The B.E. Journal of Macroeconomics is currently edited by Arpad Abraham and Tiago Cavalcanti

More articles in The B.E. Journal of Macroeconomics from De Gruyter
Bibliographic data for series maintained by Peter Golla ().