The Within-Distribution Business Cycle Dynamics of German Firms
48 Pages Posted: 8 Jun 2016
Date Written: 2006
Abstract
We analyse stylised facts for Germany's business cycle at the firm level. Based on longitudinal firm-level data from the Bundesbank's balance sheet statistics covering, on average, 55,000 firms per year from 1971 to 1998, we estimate transition probabilities of a firm in a certain real sales growth regime switching to another regime in the next period, e.g. whether a firm that has witnessed a high growth rate is likely to stay in a regime of high growth or is bound to switch in a regime of low growth in the subsequent period. We find that these probabilities depend on the business cycle position.
Keywords: business cycles, firm growth, Markov chains
JEL Classification: D21, D92, E32
Suggested Citation: Suggested Citation