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Small and Large Firms over the Business Cycle

10 October 2018 at 11:00 AM - 12:30 PM

Room 103, Campus on Viale Romania 32

Speaker: Neil Mehrotra, Brown University

Title: Small and Large Firms Over the Business Cycle

Abstract: This paper uses new confidential Census data to revisit the relationship between firm size, cyclicality, and financial frictions. First, we find that large firms (the top 1% by size) are less cyclically sensitive than the rest. Second, high and rising concentration implies that the higher cyclicality of the bottom 99% of firms only has a limited impact on aggregate fluctuations. Third, differences in cyclicality are not simply explained by financial frictions, and in fact appear largely unrelated to proxies for financial strength. Industry variation instead suggests that large firms have less cyclical customer bases, in particular due to export exposure.