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The granular economy of Kazakhstan

Jozef Konings, Galiya Sagyndykova, Venkat Subramanian and Astrid Volckaert
Additional contact information
Galiya Sagyndykova: Nazarbayev University, Department of Economics
Venkat Subramanian: Nazarbayev University, Graduate School of Business
Astrid Volckaert: KU Leuven, Faculteit Economie en Bedrijfswetenschappen, Vlaams Instituut voor Economie en Samenleving (VIVES)

No 2021/01, Working Papers from Nazarbayev University, Graduate School of Business

Abstract: This paper analyzes the importance of idiosyncratic firm specific shocks for explaining macroeconomic fluctuations in an emerging economy. To this end, we use detailed quarterly firm level data to document that the firm size distribution is fat-tailed and that idiosyncratic shocks of the largest 30 firms appear to explain nearly 80% of the growth in aggregate total factor productivity. This confirms earlier research for the U.S. of the "granular hypothesis" (Gabaix, 2011). Thus individual firm shocks do not average out in the aggregate as is assumed in most of the macroeconomic literature, instead, macroeconomic questions can be answered by analyzing the behavior of the largest firms.

Keywords: granularity; firm heterogeneity; aggregate fluctuations; Total Factor Productivity; transitional economies (search for similar items in EconPapers)
JEL-codes: D24 E23 E32 L16 L25 P27 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2021-10
New Economics Papers: this item is included in nep-bec, nep-cis, nep-cwa, nep-isf, nep-mac and nep-sbm
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