Gabaix, Xavier - Econometric Society - 2004
If firm sizes have a small dispersion, microeconomic shocks lead to negligible aggregate fluctuations. This has led … economists to appeal to macroeconomic (sectoral or aggregate shocks) shocks to explain aggregate fluctuations. However, the …, idiosyncratic fluctuations aggregate up to non-trivial macro fluctuations. We illustrate how this happens, and contend that business …