Lenza, Michele; Pagano Giorgianni, Giuseppe; Rossi, Lorenza - 2026
distribution. We augment a Bayesian VAR with these measures and compare its performance to a standard aggregate VAR and to a … functional VAR that incorporates the full cross-sectional distribution of firm revenues. We find that firm-level heterogeneity … contains information not captured by aggregate variables. Including the two statistics allows the VAR to closely replicate the …