Firms and Aggregate Dynamics

Francesco Franco and Thomas Philippon ()
Additional contact information
Francesco Franco: Faculdade de Economia Universidade Nova de Lisboa

The Review of Economics and Statistics, 2007, vol. 89, issue 4, 587-600

Abstract: We investigate the role of permanent and transitory shocks for firms and aggregate dynamics. We find that permanent shocks to productivity and permanent shifts in the composition of output explain at least four-fifths of firms' dynamics. However, these permanent shocks are almost uncorrelated across firms and are therefore less relevant for aggregate dynamics. Transitory shocks, on the other hand, are not very important at the firm level, but they account for most of the volatility of aggregate hours and output, because they are significantly correlated across firms. Finally, we try to make some progress on the interpretation of the shocks. Copyright by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (34)

Downloads: (external link)
http://www.mitpressjournals.org/doi/pdf/10.1162/rest.89.4.587 link to full text (application/pdf)

Related works:
Working Paper: Firms and Aggregate Dynamics (2005)
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:tpr:restat:v:89:y:2007:i:4:p:587-600

Ordering information: This journal article can be ordered from
https://mitpressjour ... rnal/?issn=0034-6535

Access Statistics for this article

The Review of Economics and Statistics is currently edited by Pierre Azoulay, Olivier Coibion, Will Dobbie, Raymond Fisman, Benjamin R. Handel, Brian A. Jacob, Kareen Rozen, Xiaoxia Shi, Tavneet Suri and Yi Xu

More articles in The Review of Economics and Statistics from MIT Press
Bibliographic data for series maintained by The MIT Press ().