2010 Fiscal Year Final Research Report

Firm-level Volatility and Economic Growth

Research Project

Project/Area Number	21730163
Research Category	Grant-in-Aid for Young Scientists (B)
Allocation Type	Single-year Grants
Research Field	Economic theory
Research Institution	Tohoku University (2010) Waseda University (2009)
Principal Investigator	OIKAWA Koki 東北大学, 大学院・経済学研究科, 准教授 (90468728)
Project Period (FY)	2009 – 2010
Keywords	企業レベルの不確実性 / 経済成長
Research Abstract	This research project built a theory that explains firm-level uncertainty, which is not aggregate but idiosyncratic, stimulates economic growth through accumulation of knowledge to reduce uncertainty. A surge in firm-level uncertainty surely brings a negative impact on the economy at least in the short run. However, the long-run impact turns out positive. I examined this model empirically using the firm-level data in the United States. Besides, I looked into the mechanism that generates relationship between firm-level uncertainty and macroeconomic fluctuation, based on the observed data in Japan and the United States. Firm-level uncertainty is procyclical in the United States on one hand, and it is countercyclical in Japan on the other. The model I built consistently explains this opposite tendency in cyclicality.