Monopolistically Skewed Business Cycles: On the Origins of Distributional Fluctuations
Submitted
How do aggregate shocks jointly move mean growth, dispersion, and skewness over the business cycle? Among U.S. public firms, larger firms have lower, more stable revenue growth dispersion but larger skewness fluctuations. We state and explain these moment dynamics and their size gradient through heterogeneous exposure and demand curvature. With general homothetic demand, Marshall’s Laws make equilibrium policies concave, generating skewed growth. Under mild conditions, larger firms have flatter policies with stronger curvature because they charge higher markups, linking distributional business cycles to market power. Joint estimates of relative policy slopes, curvature, and idiosyncratic volatility support this mechanism.
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