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Varying Heterogeneity among U.S. Firms: Facts and Implications

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  • Hyunbae Chun

    (Sogang University)

  • Jung-Wook Kim

    (Seoul National University)

  • Randall Morck

    (University of Albert)

Abstract

U.S. firms' stock return volatility rose fivefold from 1971 through 2000 and then reverted to near 1971 levels by 2006. This was driven mainly by a rise and fall in the firm-specific, rather than systematic, component of volatility. Firm-level total factor productivity growth volatility exhibited a similar pattern. We hypothesize that firm heterogeneity, reflected in firm-specific volatility, rises as a new general purpose technology (GPT) propagates across the economy and then ebbs once the GPT is widespread. Measuring GPT adoption by information technology capital intensity, we find robust cross-industry empirical evidence supporting the hypothesis. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 93 (2011)
Issue (Month): 3 (August)
Pages: 1034-1052

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Handle: RePEc:tpr:restat:v:93:y:2011:i:3:p:1034-1052

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Web page: http://mitpress.mit.edu/journals/

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References

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  1. Miles Parker, 2006. "Diverging Trends in Aggregate and Firm-Level Volatility in the UK," Discussion Papers 16, Monetary Policy Committee Unit, Bank of England.
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Cited by:
  1. Marco Corsino & Enrico Zaninotto, 2012. "Revealing the influence of managerial practices and entrepreneurs' characteristics on hotel efficiency," DISA Working Papers 2012/03, Department of Computer and Management Sciences, University of Trento, Italy, revised May 2012.
  2. Chun, Hyunbae & Ha, Joonkyung & Kim, Jung-Wook, 2014. "Firm heterogeneity, R&D, and economic growth," Economic Modelling, Elsevier, vol. 36(C), pages 149-156.

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