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On the determination of the granular size of the economy

Omar Blanco-Arroyo (), Ruiz-Buforn, Alba, David Vidal-Tomás and Simone Alfarano ()

MPRA Paper from University Library of Munich, Germany

Abstract: Introducing the granular hypothesis, Gabaix (2011) shows that the idiosyncratic shocks of a few “granular” firms account for a significant fraction of aggregate fluctuations of the US business cycle. In the literature, however, the question of how many are the granular firms in an economy is left unanswered. Using Spanish data, we propose a novel methodology to calibrate the granular size of the economy, i.e. the number of granular firms.

Keywords: Business cycle; idiosyncratic shocks; productivity; granular residual; granularity index (search for similar items in EconPapers)
JEL-codes: C20 E32 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-mac
Date: 2018-06-26
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