20.500.12556/RUL-176672 Shock transmission in granular economies impact of pass-through effects of idiosyncratic microshocks to the aggregate This paper studies the importance of shocks to the largest firms on the aggregate output. Using firm-level data on eight European countries (2006--2019), we find that shocks to the largest firms explain an important part of aggregate fluctuations. Our paper brings several novelties. Firstly, in addition to the aggregate level, we extend the analysis of the transmission of firm-level shocks to study the shocks at the sectoral level. Secondly, we provide a novel measurement for demand-side shocks within granularity. We show that idiosyncratic shocks affecting the largest 20 firms can explain almost half of the output volatility, which is consistent with Gabaix (2011). Moreover, demand-side shocks contribute a greater share to this volatility compared to supply-side shocks. Finally, we show that the smaller the sample of the largest firms, the larger the propagation effect of the shocks to GDP. This suggests that a few large firms drive a large part of the aggregate volatility, while volatility of other larger firms balances out on average. management supply demand aggregate curve business cycle supply-side shocks demand-side shocks aggregate fluctuations granular residual management cikli ponudba povpraševanje agregatna krivulja true false true Angleški jezik Slovenski jezik Članek v reviji 2025-12-08 14:30:14 2025-12-08 14:34:33 2025-12-23 04:08:49 0000-00-00 00:00:00 2025 0 0 Str. 199-220 iss. 4, article no. 2 Vol. 27 Dec. 2025 0000-00-00 Zaloznikova Objavljeno NiDoloceno 0000-00-00 0000-00-00 0000-00-00 658 2335-4216 10.15458/2335-4216.1361 259614979 https://www.ebrjournal.net/home/vol27/iss4/2/ 1 a7cd6bc1-d439-11f0-9328-0050569b8976 https://repozitorij.uni-lj.si/Dokument.php?lang=slv&id=223157 Shock_Transmission_in_Granular_Economies__Impact_of_Pass-Through.pdf Shock_Transmission_in_Granular_Economies__Impact_of_Pass-Through.pdf 1 79F3740A9EF4A0348A189FC15789E554 f1afb6777ad95ea77ef30e0bf19f31bd48e03d8d482d7797920ff037f853d38f 20042c18-d43a-11f0-9328-0050569b8976 https://repozitorij.uni-lj.si/Dokument.php?lang=slv&id=223158 Ekonomska fakulteta Economic and business review 0 0 0