<p>Aggregate fluctuations are changes in aggregate variables, for example changes in aggregate supply and demand. If we are talking about shock it is usually implied the event was unexpected but the term is sometimes used loosely.</p>

<p>Idiosyncratic shock is an unsystematic shock, in macroeconomic models it is the shock not correlated with other variables. If you are coming from statistics it’s similar to residuals in OLS - in fact when estimating macro models with econometrics the residuals are often assumed to be the representation of idiosyncratic shocks.</p>

<p>Fat tailed distribution in economics has the same meaning as in statistics - the area in the tails/tail, or more specifically kurtosis and skewness of distribution is relatively large compared to Gaussian distribution.</p>

<p>Granular economy - well this could have different meaning depending on the exact subfield/context. In macroeconomics I saw this terminology being applied to economy that could be described by power law or Zipf law (see this <a href="https://www.imf.org/~/media/Files/Publications/WP/2017/wp17229.ashx" rel="nofollow noreferrer">IMF paper</a>). Interestingly many social relationships (city distribution and size, words used in language, firm sizes etc.) follow Zipfian distribution. But I also saw it applied differently in industrial organization but I assume you are looking for something related to macroeconomics.</p>

<p>Good sources to learn some basics/simple concepts in economics are:</p>

<p><a href="https://www.khanacademy.org" rel="nofollow noreferrer">khan academy</a> - they have free highs school level micro and macro courses and the quality is good.</p>

<p><a href="https://m.youtube.com/channel/UCqfPqpkvs1gaDNfrmwtlUpA" rel="nofollow noreferrer">Jason Welker</a> - this YouTube channel has also very good high school economics, again for both micro and macro and also for some international economics.</p>

<p>However, from your questions I feel you would more likely need something more advanced (for example I don’t think you will find any discussion of fat tails or probably not even idiosyncratic shocks in the simple sources above). I don’t know any good online source for more advanced concepts but textbooks such as Macroeconomics: A European Perspective from Blanchard Gavazzi and Amighini or for something more advanced the advanced Macroeconomics by Romer are good (you can find pdf versions online). However, when it comes to granularity I did not see that in textbooks much, so there you will probably have to dig into some papers.</p>

CC BY-SA 4.0
2019-12-08T13:24:34.613Z
First thank you so much for the caring answer. If I may, do you mind if I share one question that just came into my mind? I have skimmed through the IMF paper you have mentioned but I think I am still hovering over the word "granular." 

I thought the word granular is trying to depict how economic activities these days have changed into tinier, tinier "grainier" units. In fact, I have realized what the writer is trying to deliver in the paper has a bit different meaning than that I am thinking of. What does the "granular" economy in the paper truly mean? Could you help me out?
die4answers
CC BY-SA 4.0
2019-12-08T21:59:05.267Z
@die4answers you mean in the paper I linked to or in some other paper?
1muflon1
CC BY-SA 4.0
2019-12-09T02:03:45.417Z
Yes! I meant the very paper that you linked to.
die4answers
CC BY-SA 4.0
2019-12-09T12:29:12.570Z
@die4answers They use the word granular in its meaning: system composed of distinguishable pieces. In most standard models you cant distinguish firms from each other but if you assume that firm distribution follows zipfs law then every firm will be different from the other.
1muflon1
CC BY-SA 4.0
2019-12-04T10:32:32.183Z
2019-12-04T11:23:26.323Z
2019-12-04T11:23:26.323Z
1muflon1
<p>I am trying to read some economic articles for future use.</p>

<p>However, as a statistics major student, I am quite unfamiliar with couple of economic vocabs and concepts. Followings are the very vocabs.</p>

<p>-Aggregate Fluctuations/Shock</p>

<p>-Idiosyncratic Shock</p>

<p>-Granular economy</p>

<p>And the following is the concept</p>

<p>-What does it mean to have a fat tailed distribution. What does "fatter-tailed" distribution indicate? ex) A prominent exception is a recent contribution by Gabaix (2011), which argues that because the firm size distribution is extremely fat-tailed – the economy is ‘granular’.</p>

<p>If I may could any one of you awesome experts explain this for me ? If there is a great website where I could learn simple economic concepts please give me some ideas. Thank you so much and have a great day!</p>

<macroeconomics><firm>
Question regarding couple economic terms and concepts
die4answers
# Question regarding couple economic terms and concepts

(Asked by: username_0 on 2019-12-04)

I am trying to read some economic articles for future use.

However, as a statistics major student, I am quite unfamiliar with couple of economic vocabs and concepts. Followings are the very vocabs.

-Aggregate Fluctuations/Shock

-Idiosyncratic Shock

-Granular economy

And the following is the concept

-What does it mean to have a fat tailed distribution. What does "fatter-tailed" distribution indicate? ex) A prominent exception is a recent contribution by Gabaix (2011), which argues that because the firm size distribution is extremely fat-tailed – the economy is ‘granular’.

If I may could any one of you awesome experts explain this for me ? If there is a great website where I could learn simple economic concepts please give me some ideas. Thank you so much and have a great day!

**Tags:** macroeconomics, firm

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## 1 answers

### Answer by username_1 on 2019-12-04. Score: 0 | Accepted answer

Aggregate fluctuations are changes in aggregate variables, for example changes in aggregate supply and demand. If we are talking about shock it is usually implied the event was unexpected but the term is sometimes used loosely.

Idiosyncratic shock is an unsystematic shock, in macroeconomic models it is the shock not correlated with other variables. If you are coming from statistics it’s similar to residuals in OLS - in fact when estimating macro models with econometrics the residuals are often assumed to be the representation of idiosyncratic shocks.

Fat tailed distribution in economics has the same meaning as in statistics - the area in the tails/tail, or more specifically kurtosis and skewness of distribution is relatively large compared to Gaussian distribution.

Granular economy - well this could have different meaning depending on the exact subfield/context. In macroeconomics I saw this terminology being applied to economy that could be described by power law or Zipf law (see this [IMF paper](https://www.imf.org/~/media/Files/Publications/WP/2017/wp17229.ashx)). Interestingly many social relationships (city distribution and size, words used in language, firm sizes etc.) follow Zipfian distribution. But I also saw it applied differently in industrial organization but I assume you are looking for something related to macroeconomics.

Good sources to learn some basics/simple concepts in economics are:

[khan academy](https://www.khanacademy.org) - they have free highs school level micro and macro courses and the quality is good.

[Jason Welker](https://m.youtube.com/channel/UCqfPqpkvs1gaDNfrmwtlUpA) - this YouTube channel has also very good high school economics, again for both micro and macro and also for some international economics.

However, from your questions I feel you would more likely need something more advanced (for example I don’t think you will find any discussion of fat tails or probably not even idiosyncratic shocks in the simple sources above). I don’t know any good online source for more advanced concepts but textbooks such as Macroeconomics: A European Perspective from Blanchard Gavazzi and Amighini or for something more advanced the advanced Macroeconomics by Romer are good (you can find pdf versions online). However, when it comes to granularity I did not see that in textbooks much, so there you will probably have to dig into some papers.

> **Comments:**
> **username_0**: First thank you so much for the caring answer. If I may, do you mind if I share one question that just came into my mind? I have skimmed through the IMF paper you have mentioned but I think I am still hovering over the word "granular."   I thought the word granular is trying to depict how economic activities these days have changed into tinier, tinier "grainier" units. In fact, I have realized what the writer is trying to deliver in the paper has a bit different meaning than that I am thinking of. What does the "granular" economy in the paper truly mean? Could you help me out?  
> **username_1**: @die4answers you mean in the paper I linked to or in some other paper?  
> **username_0**: Yes! I meant the very paper that you linked to.  
> **username_1**: @die4answers They use the word granular in its meaning: system composed of distinguishable pieces. In most standard models you cant distinguish firms from each other but if you assume that firm distribution follows zipfs law then every firm will be different from the other.  

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