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Business Cycle Fluctuations And Firms' Size Distribution Dynamics

Author

Listed:
  • DOMENICO DELLI GATTI

    (Institute of Quantitative Methods and Economic Theory, Catholic University of Milan, Largo Gemelli1, I-20123 Milan, Italy)

  • CORRADO DI GUILMI

    (Department of Economics, Università, Politecnica delle Marche, Piaz.le Martelli 8, I-60121 Ancona, Italy)

  • EDOARDO GAFFEO

    (Department of Economics, University of Trento, Via Inama 5, I-33100 Trento, Italy)

  • GIANFRANCO GIULIONI

    (Department of Economics, Università, Politecnica delle Marche, Piaz.le Martelli 8, I-60121 Ancona, Italy)

  • MAURO GALLEGATI

    (Department of Economics, Università, Politecnica delle Marche, Piaz.le Martelli 8, I-60121 Ancona, Italy)

  • ANTONIO PALESTRINI

    (Department of Law in Society and History, University of Teramo, Via Crucioli 120, I-64100 Teramo, Italy)

Abstract

Power law behavior is an emerging property of many economic models. In this paper we emphasize the fact that power law distributions are persistent but not time invariant. In fact, the scale and shape of the firms' size distribution fluctuate over time. In particular, on a log–log space, both the intercept and the slope of the power law distribution of firms' size change over the cycle: during expansions (recessions) the straight line representing the distribution shifts up and becomes less steep (steeper). We show that the empirical distributions generated by simulations of the model presented in Ref. 11 mimic real empirical distributions remarkably well.

Suggested Citation

  • Domenico Delli Gatti & Corrado Di Guilmi & Edoardo Gaffeo & Gianfranco Giulioni & Mauro Gallegati & Antonio Palestrini, 2004. "Business Cycle Fluctuations And Firms' Size Distribution Dynamics," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 7(02), pages 223-240.
    • Handle: RePEc:wsi:acsxxx:v:07:y:2004:i:02:n:s0219525904000160
    DOI: 10.1142/S0219525904000160
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    References listed on IDEAS

    as
    1. Takayuki Mizuno & Makoto Katori & Hideki Takayasu & Misako Takayasu, 2003. "Statistical Laws in the Income of Japanese Companies," Papers cond-mat/0308365, arXiv.org.
    2. Yoshi Fujiwara, 2003. "Zipf Law in Firms Bankruptcy," Papers cond-mat/0310062, arXiv.org.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Irina Bashkirtseva & Alexander Pisarchik & Lev Ryashko & Tatyana Ryazanova, 2016. "Excitability And Complex Mixed-Mode Oscillations In Stochastic Business Cycle Model," Advances in Complex Systems (ACS), World Scientific Publishing Co. Pte. Ltd., vol. 19(01n02), pages 1-16, February.
    2. Matteo Richiardi, 2006. "Toward a Non-Equilibrium Unemployment Theory," Computational Economics, Springer;Society for Computational Economics, vol. 27(1), pages 135-160, February.
    3. Grilli, Ruggero & Tedeschi, Gabriele & Gallegati, Mauro, 2020. "Business fluctuations in a behavioral switching model: Gridlock effects and credit crunch phenomena in financial networks," Journal of Economic Dynamics and Control, Elsevier, vol. 114(C).

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    More about this item

    Keywords

    Firms' size distribution; power law; business cycle;
    All these keywords.

    JEL classification:

    • B21 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Microeconomics
    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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