Author information:
Norbert Czinkán: University of Alicante, Candidate. E-mail: nczinkan@ua.es
Abstract:
This paper investigates the role of activities by Hungarian firms in generating aggregate fluctuations for the time period 2000–2013. The paper decomposes aggregated sales volatility into a macro-sectoral and firm-specific component and finds that shocks to individual firms contribute significantly to aggregate fluctuations. The relative contribution of idiosyncratic shocks to sales volatility at the aggregate level is 55.5 per cent for the whole economy and 56.4 per cent for the manufacturing sector. The main mechanism through which firm fluctuations manifest themselves in aggregate fluctuations is input–output linkages.
Cite as (APA):
Czinkán, N. (2017). The Role of Individual Firms in Aggregate Fluctuations: Evidence from Hungary. Financial and Economic Review, 16(2), 40–63. https://doi.org/10.25201/FER.16.2.4063
Column:
Study
Journal of Economic Literature (JEL) codes:
E32, F12, F14, F41
Keywords:
Aggregate fluctuations, Firm-level shocks, Macro-sectoral shocks
References:
Acemoglu, D. – Carvalho, V. M. – Ozdaglar, A. – Tahbaz-Salehi, A. (2012): The network origins of aggregate fluctuations. Econometrica, 80(5): 1977–2016.
Acemoglu, D. – Ozdaglar, A. – Tahbaz-Salehi, A. (2017): Microeconomic origins of macroeconomic tail risks. The American Economic Review, 107(1): 54–108. http://dx.doi.org/10.1257/aer.20151086.
Barrot, J.N. – Sauvagnat, J. (2016): Input specificity and the propagation of idiosyncratic shocks in production networks. The Quarterly Journal of Economics, 131(3): 1543–1592. http://dx.doi.org/10.1093/qje/qjw018.
Carvalho, V.M. – Gabaix, X. (2013): The Great Diversification and its Undoing. American Economic Review, 103(5): 1697–1727. http://dx.doi.org/10.1257/aer.103.5.1697.
Carvalho, V.M. (2014): From micro to macro via production networks. The Journal of Economic Perspectives, 28(4): 23–48. http://dx.doi.org/10.1257/jep.28.4.23.
Castro, R. – Clementi, G.L. – Lee, Y. (2015): Cross sectoral Variation in the Volatility of Plant Level Idiosyncratic Shocks. The Journal of Industrial Economics, 63(1): 1–29. http://dx.doi.org/10.1111/joie.12069.
Davis, S.J. – Haltiwanger, J. – Jarmin, R. – Miranda, J. (2007): Volatility and dispersion in business growth rates: Publicly traded versus privately held firms. NBER Macroeconomics Annual, Volume 21. MIT Press, 107–180. http://dx.doi.org/10.1086/ma.21.25554954.
Di Giovanni, J. – Levchenko, A.A. – Méjean, I. (2014): Firms, Destinations, and Aggregate Fluctuations. Econometrica, 82(4): 1303–1340. https://doi.org/10.3982/ecta11041.
Friberg, R. – Sanctuary, M. (2016): The contribution of firm-level shocks to aggregate fluctuations: The case of Sweden. Economics Letters, 147: 8–11. http://dx.doi.org/10.1016/j.econlet.2016.08.009.
Gabaix, X. (2011): The Granular Origins of Aggregate Fluctuations. Econometrica, 79(3): 733–772. https://doi.org/10.3982/ecta8769.
Haltiwanger, J. (1997): Measuring and analyzing aggregate fluctuations: the importance of building from microeconomic evidence. Federal Reserve Bank of St. Louis Review, 79(3): 55–77.
Kalemli-Ozcan, S. – Sorensen, B. – Volosovych, V. (2014): Deep financial integration and volatility. Journal of the European Economic Association, 12(6): 1558–1585. http://dx.doi.org/10.1111/jeea.12089.
Koren, M. – Tenreyro, S. (2007): Volatility and Development. Quarterly Journal of Economics, 122(1): 243–287. http://dx.doi.org/10.1162/qjec.122.1.243.
Koren, M. – Tenreyro, S. (2013): Technological diversification. The American Economic Review, 103(1): 378–414. http://dx.doi.org/10.1257/aer.103.1.378.
Long, J.B. – Plosser, C.I. (1983): Real Business Cycles. Journal of Political Economy, 91(1): 39–69. http://dx.doi.org/10.1086/261128.
Magerman, G. – De Bruyne, K. – Dhyne, E. – Van Hove, J. (2016): Heterogeneous firms and the micro origins of aggregate fluctuations. National Bank of Belgium – Working Paper Series, No. 312.
Melitz, M.J. (2003): The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity. Econometrica, 71(6): 1695–1725. http://dx.doi.org/10.1111/1468-0262.00467.
Stockman, A.C. (1988): Sectoral and National Aggregate Disturbances to Industrial Output in Seven European Countries. Journal of Monetary Economics, 21(2–3): 387–409. http://dx.doi.org/10.1016/0304-3932(88)90037-2.
Vannoorenberghe, G. (2012): Firm-level volatility and exports. Journal of International Economics, 86(1): 57–67. http://dx.doi.org/10.1016/j.jinteco.2011.08.013.