Dispersion Over the Business Cycle: Passthrough, Productivity, and Demand

Thu, 01 Jan 2026 00:00:00 +0000

Carlsson, Clymo, and Joslin use Swedish manufacturing firm-level microdata for 1998–2013 to separately identify and characterize the cyclical behavior of physical productivity (TFPQ) shocks and demand shocks at the firm level, two forces that are observationally equivalent under the standard CES-demand benchmark. The paper’s central contribution is threefold: it documents new empirical facts about dispersion cyclicality, estimates a non-constant-elasticity (non-CES) demand curve directly from firm-level price and quantity data, and embeds those estimates into a quantitative heterogeneous-firm model to study the aggregate consequences of each type of dispersion shock.

Mikael Carlsson | Macro Paper Warehouse

Dispersion Over the Business Cycle: Passthrough, Productivity, and Demand