On the granularity of the German economy – first evidence from the top 100 companies panel database

ABSTRACT

Applying the approach suggested by Gabaix (Econometrica 2011) this paper uses the newly available Top 100 Companies Panel Database for Germany to demonstrate that idiosyncratic shocks in the largest firms seem not to be important for an understanding of the aggregate volatility of the German economy. This evidence is in contrast with findings for other countries and it differs from earlier results for parts of the German economy.

KEYWORDS:

• Idiosyncratic shocks
• granular residual
• Germany

JEL CLASSIFICATION:

• E32

Acknowledgments

We thank two anonymous referees for very helpful comments on an earlier version of this paper. The data and the Stata code used to produce the empirical results reported in this note are available from the corresponding author; please contact Joachim Wagner by e-mail: [email protected] .

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ The data are available from the website of the Monopolies Commission

https://monopolkommission.de/de/themen/top-100-panel.html.