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Aggregate Fluctuations from Clustered Micro Shocks 2022-12-04

Subject:Aggregate  Fluctuations from Clustered Micro Shocks

Guest:Daisoon Kim, Assistant Professor, North Carolina State University

Host:Yuta SUZUKI, Assistant Professor, ACEM, SJTU

Time:Wednesday, December 7, 2022 10:00-11:30

Venue:Antai B716 (Zoom)

(Please send email to for meeting number and password.)


Idiosyncratic shocks to individual firms affect  aggregates when they are correlated. In this case, a firm’s cross-sectionally demeaned fluctuations (a) are a  poor proxy for measuring true idiosyncratic shocks and (b) have negligible  cross-firm correlation by construction, regardless of true correlation. This  paper proposes a way to calculate a range of the contribution of idiosyncratic  comovements across firms within industries to aggregate fluctuations, “clustered origins”,  from observed data. In the US, clustered origins can explain GDP volatility  and its evolution. The contribution of clustered origins to GDP volatility  increased from around 10% to 25% over the past two decades. These findings  suggest networks and interconnections between firms deserve a central place in  macroeconomics.


Daisoon Kim, Assistant Professor of NC State  University, originally from the Republic of Korea, focuses his research on  international economics and macroeconomics fields. He received his doctorate  degree in economics from the University of Washington. His previous role was  at the London Business School in the UK as a research fellow.