Technological Synergies, Heterogeneous Firms, and Idiosyncratic Volatility

Fernández-Villaverde, Jesús, Yang Yu and Francesco Zanetti
Authors registered in the RePEc Author Service: Jesus Fernandez-Villaverde

No 18899, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This paper shows the importance of technological synergies among heterogeneous firms for aggregate fluctuations. First, we document six novel empirical facts using microdata that suggest the existence of important technological synergies between trading firms, the presence of positive assortative matching among firms, and their evolution during the business cycle. Next, we embed technological synergies in a general equilibrium model calibrated on firm-level data. We show that frictions in forming trading relationships and separation costs explain imperfect sorting between firms in equilibrium. In particular, an increase in the volatility of idiosyncratic productivity shocks significantly decreases aggregate output without resorting to non-convex adjustment costs.

JEL-codes: C63 C68 C78 E32 E37 E44 G12 (search for similar items in EconPapers)
Date: 2024-03
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Related works:
Working Paper: Technological Synergies, Heterogeneous Firms, and Idiosyncratic Volatility (2024)
Working Paper: Technological Synergies, Heterogeneous Firms, and Idiosyncratic Volatility (2024)
Working Paper: Technological Synergies, Heterogeneous Firms and Idiosyncratic Volatility (2024)
Working Paper: Technological synergies, heterogeneous firms, and idiosyncratic volatility (2024)
Working Paper: Technological Synergies, Heterogeneous Firms, and Idiosyncratic Volatility (2024)
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