Cover IMF Working Papers
The Granular Origins of Macroeconomic Fluctuations in Europe
Author: Mr. Christian H Ebeke and Kodjovi M. Eklou
Series:
IMF Working Papers
Volume/Issue:
Volume 2017: Issue 229
Language:
English
Publication Date:
07 Nov 2017
DOI:
https://0-doi-org.library.svsu.edu/10.5089/9781484324806.001
ISBN:
9781484324806
ISSN:
1018-5941
Pages:
33
Keywords:
WP; productivity growth; Idiosyncratic shocks; Aggregate fluctuations; SMEs; Balance Sheets; large firm; firm size distribution; productivity shock; firms sales; Productivity; Small and medium enterprises; Labor productivity; Spillovers; Services sector; Global; Europe
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IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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This paper investigates the microeconomic origins of aggregate economic fluctuations in Europe. It examines the relevance of idiosyncratic shocks at the top 100 large firms (the granular shocks) in explaining aggregate macroeconomic fluctuations. The paper also assesses the strength of spillovers from large firms onto SMEs. Using firm-level data covering over 14 million firms and eight european countries (Austria, Belgium, Finland, France, Germany, Italy, Portugal and Spain), we find that: (i) 40 percent of the variance in GDP in the sample can be explained by idiosyncratic shocks at large firms; (ii) positive granular shocks at large firms spill over to domestic SMEs’ output, especially if SMEs’ balance sheets are healthy and if SMEs belong to the services and manufacturing sectors.
Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund