EconPapers    
Economics at your fingertips  
 

Debunking the Granular Origins of Aggregate Fluctuations: From Real Business Cycles back to Keynes

Giovanni Dosi (), Mauro Napoletano (), Andrea Roventini () and Tania Treibich

LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy

Abstract: In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (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., 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)
New Economics Papers: this item is included in nep-bec, nep-dge, nep-hme, nep-knm, nep-mac and nep-pke
Date: 2018-07-03
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.lem.sssup.it/WPLem/files/2018-19.pdf (application/pdf)

Related works:
Journal Article: Debunking the granular origins of aggregate fluctuations: from real business cycles back to Keynes (2019) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ssa:lemwps:2018/19

Access Statistics for this paper

More papers in LEM Papers Series from Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-04-15
Handle: RePEc:ssa:lemwps:2018/19