Firm-Specific Productivity Risk over the Business Cycle : Facts and Aggregate Implications

  title={Firm-Specific Productivity Risk over the Business Cycle : Facts and Aggregate Implications},
  author={Ruediger Bachmann Christian Bayer},
  • Ruediger Bachmann Christian Bayer
  • Published 2009
Is time-varying firm-level uncertainty a major cause or amplifier of the business cycle? This paper investigates this question in the context of a heterogeneous-firm RBC model with persistent firm-level productivity shocks and lumpy capital adjustment, where cyclical changes in uncertainty correspond naturally to cyclical changes in the cross-sectional dispersion of firm-specific Solow residual innovations. We use a German firm-level data set to investigate the extent to which firm-level… CONTINUE READING
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