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The cross-sectional dynamics of German business cycles: a bird's eye view

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  • Döpke, Jörg
  • Funke, Michael
  • Holly, Sean
  • Weber, Sebastian

Abstract

We establish some stylised facts for Germany's business cycle at the level of the firm. Based on longitudinal firm-level data from the Bundesbank's balance sheet statistic covering, on average, 55,000 firms per year from 1971 to 1998, we analyse the reallocation across individual producers and, in turn, the connection of this reallocation to aggregate business cycles. The empirical results indicate a pronounced heterogeneity of real sale changes across firms. Moreover, the distribution of growth rates of firm's real sales is influenced by business cycle conditions. In particular, the cross-section skewness of real sales changes is strongly counter-cyclical. The results confirm most of the findings for the UK and the US by Higson et al. (2002, 2004) and are, therefore, robust stylised facts of the business cycle. --

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Bibliographic Info

Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2005,23.

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Date of creation: 2005
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Handle: RePEc:zbw:bubdp1:4217

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Keywords: business cycles; cross-sectional moments; firm growth;

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References

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  1. von Kalckreuth, Ulf & Chirinko, Robert S., 2002. "Further Evidence On The Relationship Between Firm Investment And Financial Status," Discussion Paper Series 1: Economic Studies 2002,28, Deutsche Bundesbank, Research Centre.
  2. Higson, C. & Holly, S. & Kattuman, P. & S. Platis, 2001. "The Business Cycle, Macroeconomic Shocks and the Cross Section: The Growth of UK Quoted Companies," Cambridge Working Papers in Economics, Faculty of Economics, University of Cambridge 0114, Faculty of Economics, University of Cambridge.
  3. Caballero, R. & Engel, E.M.R.A., 1991. "Heterogeneity and Output Fluctuations in a Dynamic Menu-Cost Economy," Discussion Papers, Columbia University, Department of Economics 1991_16, Columbia University, Department of Economics.
  4. Koenker,Roger, 2005. "Quantile Regression," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521845731.
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  7. Caballero, Ricardo J & Hammour, Mohamad L, 1996. "On the Timing and Efficiency of Creative Destruction," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 111(3), pages 805-52, August.
  8. Ricardo J. Caballero & Eduardo M. R. A. Engel & John C. Haltiwanger, 1995. "Plant-Level Adjustment and Aggregate Investment Dynamics," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 26(2), pages 1-54.
  9. Abadir, Karim & Talmain, Gabriel, 2002. "Aggregation, Persistence and Volatility in a Macro Model," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 69(4), pages 749-79, October.
  10. Bronwyn H. Hall, 1986. "The Relationship Between Firm Size and Firm Growth in the U.S. Manufacturing Sector," NBER Working Papers 1965, National Bureau of Economic Research, Inc.
  11. Andrew C. Caplin & Daniel F. Spulber, 1987. "Menu Costs and the Neutrality of Money," NBER Working Papers 2311, National Bureau of Economic Research, Inc.
  12. Moshe Buchinsky, 1998. "Recent Advances in Quantile Regression Models: A Practical Guideline for Empirical Research," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 88-126.
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Citations

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Cited by:
  1. Weber, Sebastian & Döpke, Jörg, 2006. "The within-distribution business cycle dynamics of German firms," Discussion Paper Series 1: Economic Studies 2006,29, Deutsche Bundesbank, Research Centre.
  2. Michael Funke & Sebastian Weber & Jörg Döpke & Sean Holly, 2008. "The Cross-Section of Output and Inflation in a Dynamic Stochastic General Equilibrium Model with Sticky Prices," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 20809, Hamburg University, Department of Economics.
  3. Sean Holly & Emiliano Santoro, 2007. "Financial Fragility, Heterogeneous Firms and the Cross Section of the Business Cycle," Money Macro and Finance (MMF) Research Group Conference 2006, Money Macro and Finance Research Group 96, Money Macro and Finance Research Group.
  4. Bachmann, Ruediger & Bayer, Christian, 2009. "Firm-specific productivity risk over the business cycle: facts and aggregate implications," Discussion Paper Series 1: Economic Studies 2009,15, Deutsche Bundesbank, Research Centre.
  5. Ruediger Bachmann & Christian Bayer, 2009. "The Cross-section of Firms over the Business Cycle: New Facts and a DSGE Exploration," CESifo Working Paper Series 2810, CESifo Group Munich.
  6. Sebastian Weber & Joerg Doepke, 2006. "The Within-Distribution Business Cycle Dynamics of German Firms," Quantitative Macroeconomics Working Papers, Hamburg University, Department of Economics 20609, Hamburg University, Department of Economics.
  7. Bachmann, Rüdiger & Bayer, Christian, 2013. "‘Wait-and-See’ business cycles?," Journal of Monetary Economics, Elsevier, Elsevier, vol. 60(6), pages 704-719.

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