DIFFERENT MEASURES, DIFFERENT TRENDS – CONTRADICTIONS IN MACRO AND MICRO LEVEL GROWTH MEASURES

Abstract

When focusing on business performance of a country, industry or an individual firm the performance of companies may be tracked using various measures. By simulating the behaviour of a simple firm, our model underlines that the choice of measurement unit determines what distortions we will face, and thus, using different measures we may end up identifying completely contradicting cycles at macro, mezzo, and micro level. On top of that, these cycles would radically change if firms examined changed their operational, investment or financing strategy or when structural changes happen in the economy. This may end in researchers analysing non-existing cycle changes and looking for nearly identical explanations of development differences for industries, regions or countries.