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.