Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/171942
Authors: 
Karasik, Leonid
Leung, Danny
Tomlin, Ben
Year of Publication: 
2016
Series/Report no.: 
Bank of Canada Staff Working Paper 2016-51
Abstract: 
In order to understand what drives aggregate fluctuations, many macroeconomic models point to aggregate shocks and discount the contribution of firm-specific shocks. Recent research from other developed countries, however, has found that aggregate fluctuations are in part driven by idiosyncratic shocks to large firms. Using data on Canadian firms, this paper examines the contribution of large firms to industry-level fluctuations in gross output, investment and employment in the manufacturing sector. The data suggest that shocks to large firms can explain as much as 46% and 37% of the fluctuations in gross output and investment, respectively, but do not contribute to fluctuations in employment.
Subjects: 
Business fluctuations and cycles
Firm dynamics
Market structure and pricing
JEL: 
E22
E23
E24
E3
L6
Document Type: 
Working Paper

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