We develop a stylized two-sector business cycle model with endogenous firm dynamics in the investment goods sector. The positive correlation between firms' profitability and the relative price of investment goods generates an endogenous persistence mechanism in productivity dynamics which drives...

The confidence in the market mechanisms for clearing all markets splits the economic profession. In this book, not only the existing business cycle literature is examined within the framework of economic stability, but also the market structure and the interaction of markets are analysed in...

In this work we study the granular origins of business cycles and their possible underlying drivers. As shown by Gabaix (2011), the skewed nature of firm size distributions implies that idiosyncratic (and independent) firm-level shocks may account for a significant portion of aggregate...