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Technological Synergies, Heterogeneous Firms, and Uncertainty Shocks

Author

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  • Jesús Fernández-Villaverde
  • Yang Yu
  • Francesco Zanetti

Abstract

This paper examines the role of technological synergies among heterogeneous firms in business cycle fluctuations. We first document six empirical facts using microdata, revealing strong synergies, positive assortative matching, and their cyclical variations. Next, we embed these synergies into a quantitative business cycle model calibrated to firm-level data, showing that frictions in forming and dissolving trading relationships lead to imperfect sorting with significant macro effects. Specifically, we demonstrate that, in the presence of technological synergies, uncertainty shocks reduce aggregate output even without nonconvex adjustment costs, nominal rigidities, or financial frictions.

Suggested Citation

  • Jesús Fernández-Villaverde & Yang Yu & Francesco Zanetti, 2024. "Technological Synergies, Heterogeneous Firms, and Uncertainty Shocks," NBER Working Papers 32247, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32247
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    Cited by:

    1. Jesús Fernández-Villaverde & Yiliang Li & Le Xu & Francesco Zanetti, 2025. "Charting the Uncharted: The (Un)Intended Consequences of Oil Sanctions and Dark Shipping," Economics Series Working Papers 1070, University of Oxford, Department of Economics.

    More about this item

    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles

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