Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/203072 
Year of Publication: 
2018
Series/Report no.: 
LEM Working Paper Series No. 2018/19
Publisher: 
Scuola Superiore Sant'Anna, Laboratory of Economics and Management (LEM), Pisa
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.
Subjects: 
business cycles
granular residual
granularity hypothesis
agent-based models
firm dynamics
productivity growth
investment growth
JEL: 
C63
E12
E22
E32
O4
Document Type: 
Working Paper

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