What is behind aggregate productivity growth in Ireland? A granular approach

This paper is aimed to empirically test for Ireland the “granular hypothesis” (Gabaix 2011), which posits that firm-level productivity shocks can explain a sizable portion of aggregate productivity fluctuations.

The Irish case is particularly relevant as Ireland has been experiencing increasing economic concentration in recent years, to the point that micro shocks to a few selected firms in 2015 led to significant level shifts in aggregate variables like GDP and, particularly, labour productivity and total factor productivity.

Combining macro data from the CSO and the OECD with micro data from the Annual Business Survey of Economic Impact (ABSEI), the granular hypothesis is tested in Ireland for the period 2000-2016

The full paper can be found here.

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