"The Empirical Distribution of Firm Dynamics and Its Macro Implications"
Nicolas Vincent, HEC Montreal
September 6, 2022, 12:00 to 1:00 PM
Heterogeneous firm models are central to the modern economics literature. In this context, we revisit a central feature of these models: the nature of idiosyncratic shocks faced by firms. Using firm-level data, we document that the commonly assumed parametric distributions of the shocks that firms face differ in important ways from observed dynamics. We embed these findings into a general equilibrium heterogeneous firm model and show they have a first-order effect on the response of the economy to aggregate disturbances.