Citation
Tomar, Shekhar., Chakrabarti, Anindya. (2023). Granular Origin of Comovement in Fluctuations .
Copyright
2023
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Abstract
We explore the origin of business cycle synchronization through a unique administrative dataset on plant-level sales with regional and time-level heterogeneity in India. Regional sales exhibit a high level of synchronization that can be traced to comovement in a small number of large plants located in different regions, indicating a granular nature of regional synchronization. Quantitatively, the top 10 plants from each region explain almost two-thirds of the total variation in regional GDP correlation. We test three channels for synchronization, viz. through aggregate regional trade, large granular plants, or granular multi-plant firms located in different regions. We find that inter-region sales of multi-plant firms is the most dominant factor behind regional GDP synchronization and subsumes both aggregate trade and plant-level effects.
Shekhar Tomar is an Assistant Professor of Economics and Public Policy at the Indian School of Business (ISB). He completed his PhD from the Toulouse School of Economics in 2017 and worked as a Research Economist at the Reserve Bank of India (RBI) between 2017 and 2019. His research lies at the intersection of macroeconomics, trade, and finance, and he extensively uses micro-data to answer macroeconomic questions in his work. During his stint at the RBI, he regularly contributed to policy work on monetary policy and trade issues in India.
Shekhar Tomar