The granularity of the manufacturing sector: insights from a developing economy

Ali Elguellab and Ezzahid Elhadj ()
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Ezzahid Elhadj: University Mohamed 5

Economics Bulletin, 2023, vol. 43, issue 3, 1254 - 1264

Abstract: The paper examines the granularity of the manufacturing sector as a key determinant of aggregate productivity in the context of a developing economy. We investigate this hypothesis in the case of Morocco, an economy that has yet to rich the emergent market status. Our findings support that the large firms are significant drivers of fluctuations within the manufacturing sector, thereby lending support to the notion that concentration, brought about by high entry costs and institutional constraints, has far-reaching consequences. Specifically, idiosyncratic shocks, experienced by large firms, explain more than one-third of the aggregate volatility in the sector. Our robustness checks lend credence that firm-level shocks are idiosyncratic and serve as valuable predictors of fluctuations within the manufacturing sector.

Keywords: Idiosyncratic shocks; Granularity; Business cycle; productivity; Power-law distribution; concentration (search for similar items in EconPapers)
JEL-codes: E3 L6 (search for similar items in EconPapers)
Date: 2023-09-30
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