An interesting example of non-representative firm macro: Ernesto Pasten, Raphael Schoenle, and Michael Webe: Price rigidities and the granular origins of aggregate fluctuations

An interesting example of non-representative firm macro: : Ernesto Pasten, Raphael Schoenle, and Michael Weber: Price rigidities and the granular origins of aggregate fluctuations: “We study the aggregate implications of sectoral shocks in a multi-sector New Keynesian
model…

…featuring sectoral heterogeneity in price stickiness, sector size, and input-output linkages. We calibrate a 341 sector version of the model to the United States. Both theoretically and empirically, sectoral heterogeneity in price rigidity (i) generates sizable GDP volatility from sectoral shocks, (ii) amplifies both the “granular” and the “network” effects, (iii) alters the identity and relative contributions of the most important sectors for
aggregate fluctuations, (iv) can change the sign of fluctuations, (v) invalidates the Hulten (1978) Theorem, and (vi) generates a “frictional” origin of aggregate fluctuations…

April 17, 2018

AUTHORS:

Brad DeLong
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