Heterogeneity in Manufacturing Growth Risk

Wed, 01 Jan 2025 00:00:00 +0000

Research question and motivation. Since the Great Recession, quantifying downside risks to economic activity (rather than only expected outcomes) has become central for policymakers and investors. A large “growth-at-risk” literature documents that tightening financial conditions sharply raise downside risks to aggregate output while leaving upside potential roughly unchanged (Adrian, Boyarchenko and Giannone, 2019). This paper argues that the aggregate focus misses important structure: aggregate fluctuations can originate from industry-specific shocks, and recessions sharply raise cross-industry dispersion in growth (Bloom, 2014). The authors ask how downside output-growth risk from tight financial conditions differs across U.S. manufacturing industries, and which industry characteristics explain that heterogeneity.

Dick Van Dijk | Macro Paper Warehouse

Heterogeneity in Manufacturing Growth Risk