Common Components in Firms' Growth and the Sectors Scaling Puzzle
7 Pages Posted: 25 Sep 2007
Date Written: January 2006
In this paper we show how a simple modification of the Kesten's process (Kesten, 1973), taking into account common and idiosyncratic elements, allows to reconcile the aggregate-sector puzzles on firms' size distribution reported in the literature.
Keywords: Firms' size, common components, Kesten's process
JEL Classification: L11, O41
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