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Journal article

Growth volatility and size: A firm-level study


This paper provides a systematic cross-country investigation of the relation between a firm's growth volatility and its size. For the first time the analysis is carried out using comparable and representative sets of data sourced by official business registers of an important number of countries. We show that there exists a robust negative relation between growth volatility and size with an average elasticity equal to -0.18. We check the robustness of this result against a number of potential sources of bias and in particular with respect to sectoral disaggregation and against the inclusion of firm age. Our result is consistent with the idea that independently from specific country characteristics there exists a common underlying mechanism driving the elasticity between size and growth volatility. We then propose two mechanisms able to explain our result and we conclude discussing its relevance with respect to the recent literature on granularity.


Flavio Calvino, Chiara Criscuolo, Carlo Menon and Angelo Secchi

1 April 2018


Journal of Economic Dynamics and Control 90, pp.390-407, 2018


DOI: 10.1016/j.jedc.2018.04.001