TY  - BOOK
AU  - Giovanni,Julian di
AU  - Levchenko,Andrei
AU  - Mejean,Isabelle
ED  - National Bureau of Economic Research.
TI  - Firms, Destinations, and Aggregate Fluctuations
T2  - NBER working paper series
PY  - 2014///
CY  - Cambridge, Mass.
PB  - National Bureau of Economic Research
N1  - April 2014; Hardcopy version available to institutional subscribers
N2  - This paper uses a database covering the universe of French firms for the period 1990--2007 to provide a forensic account of the role of individual firms in generating aggregate fluctuations. We set up a simple multi-sector model of heterogeneous firms selling to multiple markets to motivate a theoretically-founded decomposition of firms' annual sales growth rate into different components. We find that the firm-specific component contributes substantially to aggregate sales volatility, mattering about as much as the components capturing shocks that are common across firms within a sector or country. We then decompose the firm-specific component to provide evidence on two mechanisms that generate aggregate fluctuations from microeconomic shocks highlighted in the recent literature: (i) when the firm size distribution is fat-tailed, idiosyncratic shocks to large firms directly contribute to aggregate fluctuations; and (ii) aggregate fluctuations can arise from idiosyncratic shocks due to input-output linkages across the economy. Firm linkages are approximately three times as important as the direct effect of firm shocks in driving aggregate fluctuations
UR  - https://www.nber.org/papers/w20061
UR  - http://dx.doi.org/10.3386/w20061
ER  -