How does productivity evolve at the microeconomic level, and how does that evolution shape macroeconomic risk? Using input and output quantities, we measure physical productivity growth. Size shapes non-Gaussian distributions and nonlinear dynamics. Larger producers exhibit sharper peaks and thicker tails, recover more strongly from losses, and retain more gains. We estimate a microeconomically disciplined, size-dependent, regime-switching law of motion capturing these distributional and dynamic facts. Aggregation yields higher kurtosis and thicker standardized tails than a Gaussian, raising the probability of technological recessions six times. Size determines whose shocks matter; size-conditioned productivity dynamics determine the aggregate risks they carry.
2026- 11th Annual International Conference in Hawaii with Kobe University - Honolulu, Hawaii
- Department of Economics, University of Hawaii at Manoa - Honolulu, Hawaii
- 2nd conference on Networks in Economics, Theory and Evidence - Honolulu, Hawaii
- Department of Economics, University of Washington - Seattle, Washington