13 Feb 2020 This post applies a basic framework that is grounded in economic theory to provide a back-of-the envelope calculation of how the “737 MAX

3In Appendix 8, I use Hulten's Theorem to show aggregate volatility depends on the herfindahl of the economy, and the herfindahl of the economy depends on

In an efﬁcient economy, the macro impact of a shock to industry i depends on i ’s sales as a share of aggregate output, up to a ﬁrst-order In this sense, we extend the foundational theorem of Hulten (1978) beyond the first order to capture nonlinearities. Key features ignored by first-order approximations that play a crucial role are: structural microeconomic elasticities of substitution, network linkages, structural microeconomic returns to scale, and the extent of factor reallocation. of GDP. Hulten’s theorem (Appendix B) motivates the use of sales rather than value added. innovations by Walmart, the difﬁculties of a Japanese bank, new exports by Boeing, and a strike at General Motors.3 Since modern economies are dominated by large ﬁrms, idiosyncratic shocks to these ﬁrms can lead to nontrivial aggregate shocks.

2. Prices propagate downstream. • Hulten's theorem: d log Y d log zi. 22 Apr 2020 Hulten's theorem states that in an efficient economy, the Domar weights are sufficient statistics for the first-order effects of sectoral productivities Key-words: singular operators, time derivative, hypervirial theorem, Ehrenfest theorem, Coulomb and virial theorem for Coulomb and oscillator potentials was considered and corrections to the Kramers' sum The Hulten potential: In this sense, we extend the foundational theorem of Hulten (1978) beyond the first order to capture nonlinearities. Key features ignored by first‐order 30 Nov 2020 The Hulten's theorem holds across steady-states: the sales share γi of sector i characterizes the steady-state importance of each sector's TFP. 2 Nov 2020 conomic Shocks: Beyond Hulten's Theorem,” NBER Working Papers 23145, National.

In this sense, we extend the foundational theorem of Hulten (1978) beyond first-order terms to capture nonlinearities. Key features ignored by first-order approximations that play a crucial role are: structural elasticities of substitution, network linkages, structural returns to scale, and the extent of factor reallocation.

Barany, Z. and Siegel, C. (2019). Engines of Climate Change Skepticism on Adaptation in a Market Economy [ NBER ]: The Macroeconomic Impact of Microeconomic Shocks: Beyond Hultens Theorem The macroeconomic impact of microeconomic shocks: beyond Hulten's Theorem.

Hulten, D. Campbell, T. Bresnahan, and R. E. Caves (1992). Productivity Dynamics in. Manufacturing Plants. Brookings Papers on Economic Activity.

References: Gabaix, “The Granular Origins of Aggregate Fluctuations”, Econometrica, 2011. Baqaee and Fahri, “Beyond Hulten Theorem”, Econometrica, Forthcoming. Acemoglu, Carvalho, Ozdaglar and Tahbaz-Salehi, “The Network Origins of Aggregate Hulten’s theorem appeared to offer a very useful simplification and so it diverted the attention of economists away from trying to model the structure of production. But I’ve always been skeptical.

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Hulten's theorem gives a formal justi cation for this average as a rst-order approximation and shows that the appropriate weights are observed expenditure shares. This is called Domar (1961) aggregation, and not only is it of theoretical interest, but it also underlies much of national accounting.

Barany, Z. and Siegel, C. (2019). Engines of sectoral labor productivity growth. Working paper.
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to be able to write aggregates as a weighted average of individual quantities. Hulten’s theorem gives a formal justiﬁcation for this average as a ﬁrst-order approximation and showsthattheappropriateweightsareobservedexpenditureshares. ThisiscalledDomar (1961) aggregation, and not only is it of theoretical interest, but it also underlies much of

Key features ignored by first-order approximations that play a crucial role are: structural elasticities of substitution, network linkages, structural returns to scale, and the extent of factor reallocation. Our Hulten’s Theorem To understand B t, let’s study rst the true aggregate permanent income Prop. Our Hulten’s Theorem Aggregate permanent income is invariant to the AD shock t.

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Hulten’s Theorem Deﬁne C(A1;:::;AN) to be competitive equilibrium aggregate consumption function interpreted as output. Theorem 1.1 (Hulten) Let l i denote industry i’s sales as a share of output, then dlogC dlogAi = l i:

Ladder Faculty; Courtesy Faculty components.1 Hulten (1978), building on the work of Solow (1957), provided a rationale for using Domar aggregation in the construction of an aggregate productivity index. Hulten’s theorem states that, as long as the equilibrium is e cient, we have GDP GDP X f f L f L f ˇ X i i TFP i TFP i; where L f is the supply of factor f, f is its of Vad tycker du om stjärnbetyget Hultens har fått? Kolla in vad 1 084 människor har skrivit om dem och dela med dig av din egen upplevelse. Hulten’s Theorem (1978) Take an efﬁcient economy with N goods produced by N sectors subject to Hicks-neutral shocks A i. Hulten’s Theorem: ∂ logC ∂ logAi = p iy PC i.e at the ﬁrst order: logC ≈ N ∑ i=1 p iy i PC logA i ⇒ The effect of shocks on C is summarized by the sales share only! The “Diversiﬁcation Argument” (Lucas, 1977): Baqaee, D.R. and Farhi, E. (2018) The Macroeconomic impact of microeconomic shocks: beyond Hultens theorem. Working paper.