Technological Synergies, Heterogeneous Firms, and Uncertainty Shocks

Jesus Fernandez-Villaverde, Yang Yu and Francesco Zanetti

No 32247, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines the role of technological synergies among heterogeneous firms in business cycle fluctuations. We first document six empirical facts using microdata, revealing strong synergies, positive assortative matching, and their cyclical variations. Next, we embed these synergies into a quantitative business cycle model calibrated to firm-level data, showing that frictions in forming and dissolving trading relationships lead to imperfect sorting with significant macro effects. Specifically, we demonstrate that, in the presence of technological synergies, uncertainty shocks reduce aggregate output even without nonconvex adjustment costs, nominal rigidities, or financial frictions.

JEL-codes: C63 C78 E3 (search for similar items in EconPapers)
Date: 2024-03
Note: EFG
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Citations: View citations in EconPapers (1)

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