Debunking the granular origins of aggregate fluctuations: from real business cycles back to Keynes

Giovanni Dosi, Mauro Napoletano, Andrea Roventini and Tania Treibich

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Abstract: In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (Econometrica 79:733–772, 2011), the skewed nature of firm size distributions implies that idiosyncratic (and independent) firm-level shocks may account for a significant portion of aggregate volatility. Yet, we question the original view grounded on "supply granularity", as proxied by productivity growth shocks – in line with the Real Business Cycle framework–, and we provide empirical evidence of a "demand granularity", based on investment growth shocks instead. The role of demand in explaining aggregate fluctuations is further corroborated by means of a macroeconomic Agent-Based Model of the "Schumpeter meeting Keynes" family Dosi et al. (J Econ Dyn Control 52:166–189, 2015). Indeed, the investigation of the possible microfoundation of RBC has led us to the identification of a sort of microfounded Keynesian multiplier.

Keywords: Business cycles; Granular residual; Granularity hypothesis; Agent-based models; Firm dynamics; Productivity growth; Investment growth (search for similar items in EconPapers)
Date: 2019-03
New Economics Papers: this item is included in nep-bec, nep-cmp, nep-dge, nep-hme, nep-mac and nep-pke
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Published in Journal of Evolutionary Economics, 2019, 29 (1), pp.67-90. ⟨10.1007/s00191-018-0590-4⟩

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Related works:
Journal Article: Debunking the granular origins of aggregate fluctuations: from real business cycles back to Keynes (2019)
Working Paper: Debunking the granular origins of aggregate fluctuations: from real business cycles back to Keynes (2019)
Working Paper: The Debunking the Granular origins of Aggregate fluctuations: from real Business Cycles back to Keynes (2018)
Working Paper: The Debunking the Granular Origins of Aggregate Fluctuations: From Real Business Cycles back to Keynes (2018)
Working Paper: The Debunking the Granular Origins of Aggregate Fluctuations: From Real Business Cycles back to Keynes (2018)
Working Paper: Debunking the Granular Origins of Aggregate Fluctuations: From Real Business Cycles back to Keynes (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02557845

DOI: 10.1007/s00191-018-0590-4

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