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Technological Synergies, Heterogeneous Firms, and Idiosyncratic Volatility / Jesús Fernández-Villaverde, Yang Yu, Francesco Zanetti.
- Format:
- Book
- Author/Creator:
- Fernández-Villaverde, Jesús.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w32247.
- NBER working paper series no. w32247
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2024.
- Summary:
- This paper shows the importance of technological synergies among heterogeneous firms for aggregate fluctuations. First, we document six novel empirical facts using microdata that suggest the existence of important technological synergies between trading firms, the presence of positive assortative matching among firms, and their evolution during the business cycle. Next, we embed technological synergies in a general equilibrium model calibrated on firm-level data. We show that frictions in forming trading relationships and separation costs explain imperfect sorting between firms in equilibrium. In particular, an increase in the volatility of idiosyncratic productivity shocks significantly decreases aggregate output without resorting to non-convex adjustment costs.
- Notes:
- Print version record
- March 2024.
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