A Granular View of the Australian Business Cycle
We provide evidence supporting the hypothesis that idiosyncratic firm‐level shocks are important drivers of the Australian business cycle (granular hypothesis). We first document that the distribution of firm size in Australia is substantially asymmetric and follows a power‐law distribution with a l...
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| Published in | The Economic record Vol. 95; no. 311; pp. 407 - 424 |
|---|---|
| Main Authors | , |
| Format | Journal Article |
| Language | English |
| Published |
Richmond
Blackwell Publishing Ltd
01.12.2019
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| Subjects | |
| Online Access | Get full text |
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| Abstract | We provide evidence supporting the hypothesis that idiosyncratic firm‐level shocks are important drivers of the Australian business cycle (granular hypothesis). We first document that the distribution of firm size in Australia is substantially asymmetric and follows a power‐law distribution with a long right tail. We then show that labour productivity shocks to the largest non‐financial firms in Australia account for about 20–40 per cent of the variation in Australian GDP growth over the period 2000–18. Besides energy sector firms, firms in the construction, transportation and consumer services sectors appear to be relevant drivers of GDP growth. |
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| AbstractList | We provide evidence supporting the hypothesis that idiosyncratic firm‐level shocks are important drivers of the Australian business cycle (
granular hypothesis
). We first document that the distribution of firm size in Australia is substantially asymmetric and follows a power‐law distribution with a long right tail. We then show that labour productivity shocks to the largest non‐financial firms in Australia account for about 20–40 per cent of the variation in Australian
GDP
growth over the period 2000–18. Besides energy sector firms, firms in the construction, transportation and consumer services sectors appear to be relevant drivers of
GDP
growth. We provide evidence supporting the hypothesis that idiosyncratic firm‐level shocks are important drivers of the Australian business cycle (granular hypothesis). We first document that the distribution of firm size in Australia is substantially asymmetric and follows a power‐law distribution with a long right tail. We then show that labour productivity shocks to the largest non‐financial firms in Australia account for about 20–40 per cent of the variation in Australian GDP growth over the period 2000–18. Besides energy sector firms, firms in the construction, transportation and consumer services sectors appear to be relevant drivers of GDP growth. |
| Author | Shen, Yuanting Miranda‐Pinto, Jorge |
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| CitedBy_id | crossref_primary_10_1108_JES_05_2020_0225 crossref_primary_10_1016_j_najef_2021_101545 crossref_primary_10_1080_13504851_2020_1722790 crossref_primary_10_2139_ssrn_2884737 crossref_primary_10_1080_13504851_2020_1855300 crossref_primary_10_1016_j_jebo_2020_10_004 |
| Cites_doi | 10.1016/j.physa.2018.08.027 10.1016/j.econlet.2017.11.007 10.2139/ssrn.3352890 10.1257/0002828043052303 10.1016/j.econmod.2017.11.012 10.1111/1475-4932.12356 10.1257/0002828042002651 10.5089/9781484324806.001 10.1162/003355302320935043 10.3982/ECTA11041 10.1111/1475-4932.12309 10.1162/003355399556133 10.3982/ECTA8769 10.1016/j.jinteco.2011.05.003 10.1016/0167-2231(77)90002-1 10.1016/S0304-3932(98)00057-9 10.1146/annurev.economics.050708.142940 10.1080/13504851.2012.663466 10.3982/ECTA9623 10.1257/aer.99.4.1672 10.1198/jbes.2009.06157 |
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| Copyright | 2019 Economic Society of Australia Copyright © 2019 Economic Society of Australia |
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| Notes | We would like to thank Begoña Dominguez, Ian King, Gianni La Cava, and Wang Tat Lai for helpful suggestions. We would also like to thank Juan Olaya‐Agudelo for excellent research assistance and Benjamin Beckers and Peter Tulip for sharing their data on monetary policy shocks. Finally, we wish to thank the two anonymous referees for their constructive and detailed comments. All errors are ours. |
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| SubjectTerms | Business cycles Companies Economic models GDP Gross Domestic Product Hypotheses Power Productivity Transportation |
| Title | A Granular View of the Australian Business Cycle |
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