Hultgren's Cyclical Microdiversity Patterns: A Neglected Class of Microfoundation-Stylized-Facts of the Business Cycle

The greatest empirical research project into the shape of the business cycle which has ever been made, was conducted in America at the "National Bureau of Economic Research" between 1920 and the 1950s under the guidance of Wesley Mitchell and Arthur Burns. Thor Hultgren was one of the members of Mitchell's and Burns' research team. In 1950, he applied the diffusion index, which had been used by Burns and Mitchell for the analysis of aggregate industry data, to the profits of individual corporations. His finding was that there is always a large share of corporations the profits of which move counter to the macroeconomic business cycle. Hultgren's work was ignored by his contemporaries and has never been cited, because business cycle theory was conducted only in macroeconomic aggregative terms. From the modern perspective of the microfoundation of business cycle theory in terms of heterogeneous agent models Hultgren's discovery is remarkable and important, because it provides empirical evidence of cyclical varieties which does not exist in modern literature. The paper applies his method to a German firm panel. It is argued that the evidence provided by the "Hultgren Index" should be put on the modern lists of stylized business cycle facts.