TFPR: Dispersion and Cyclicality

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

This paper investigates what drives the countercyclical dispersion of TFPR — total factor productivity measured in revenue terms — a pattern that is well documented empirically but poorly understood theoretically. The central motivation is a gap between data measurement and model theory: empirical studies (Kehrig 2011; Bloom, Floetotto, Jaimovich, Eksten, and Terry 2018) document countercyclical dispersion of TFPR, yet the models that seek to explain it routinely conflate TFPR with TFPQ (quantity-based TFP) and treat the two as interchangeable. Cooper and Ozturk argue this conflation is misleading because the distribution of TFPR is endogenous — it depends both on the exogenous distribution of TFPQ and on the endogenous price-setting decisions of firms.

Ozgen Ozturk | Macro Paper Warehouse

TFPR: Dispersion and Cyclicality