Financial Fragility, Heterogeneous Firms and the Cross Section of the Business Cycle

No 96, Money Macro and Finance (MMF) Research Group Conference 2006 from Money Macro and Finance Research Group

Abstract: There is growing evidence that the cross section of the growth rate of firms is subject to systematic distortions at business cycle frequencies. In this paper we briefly review this evidence and then offer a theoretical model that incorporates nonlinearities in the way in which firms respond to aggregate and ideosyncratic shocks. We are able to replicate the most commonly found regularity - skewness in the cross section is counter-cyclical - and show that the strength of this relationship varies with the extent of financial fragility

Keywords: financial fragility; cross section; business cycle (search for similar items in EconPapers)
JEL-codes: E32 E44 (search for similar items in EconPapers)
Date: 2007-02-02
New Economics Papers: this item is included in nep-bec and nep-mac
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http://repec.org/mmf2006/up.31533.1145617558.pdf (application/pdf)

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Working Paper: Financial Fragility, Heterogeneous Firms and the Cross Section of the Business Cycle (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:mmf:mmfc06:96

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