The granular origins of macroeconomic fluctuations.

This research program wants to provide a new and different approach to analyze macroeconomic performance, by recognizing that heterogeneous behavior of the underlying micro economic parts provide important new insights about the channels of macroeconomic fluctuations. This approach is sometimes also referred to as the ‘granular origins’ of aggregate fluctuations. The program is structured along various micro data sets that have been developed over the past years. As such, we aim to identify the ‘DNA’ of an economy. To this end, the program will engage in unravelling the micro channels affecting the key macroeconomic indicators commonly used in economic policy: Inflation, GDP growth and Unemployment. More specifically the program aims to (i) prices and inflation: understand the micro channels affecting the pass-through from international shocks to domestic prices and understand the role of price setting and price heterogeneity for aggregate price fluctuations and inflation; (ii) productivity and GDP growth: determine the importance of demand side factors in explaining the heterogeneity and persistence in revenue productivity and understand its relationship with aggregate productivity growth; and (iii) firm level employment growth and unemployment: understand how firm heterogeneity matters for aggregate employment and unemployment fluctuations, in particular in the context of the great recession.