TY  - JOUR
AU  - Bak,Peter
AU  - Chen,Kan
AU  - Scheinkman,Jose
AU  - Woodford,Michael
TI  - Aggregate Fluctuations from Independent Sectoral Shocks: Self-Organized Criticality in a Model of Production and Inventory Dynamics
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 4241
PY  - 1992
Y2  - December 1992
UR  - http://www.nber.org/papers/w4241
L1  - http://www.nber.org/papers/w4241.pdf
N1  - Author contact info:
Peter Bak

kan chen
E-Mail: kangaroochenkan@hotmail.com

Jose A. Scheinkman
Department of Economics
Princeton University
Princeton, NJ  08544-1021
Tel: 609/258-4020
Fax: 609/258-0771
E-Mail: joses@princeton.edu

Michael Woodford
Department of Economics
Columbia University
420 W. 118th Street
New York, NY 10027
Tel: 212/854-1094
Fax: 212-854-8059
E-Mail: mw2230@columbia.edu
AB  - This paper illustrates how fluctuations in aggregate economic activity can result from many small, independent shocks to individual sectors. The effects of the small independent shocks fail to cancel in the aggregate due to the presence of two non-standard assumptions: local interaction between productive units (linked by supply relationships), and non-convex technology. We also argue that neither feature on its own would suffice. In the case of a simple model, we explicitly calculate the distribution of aggregate activity in the limit of an infinite number of independently disturbed sectors.
ER  -