2020/10/28 by Nicolas Crouzet, Neil R. Mehrotra, Neil Mehrotra · 220 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Aggregate (composite) #Banking stability, regulation, efficiency #Business cycle #Census #Corporate Finance and Governance #Econometrics #Economics #Firm Innovation and Growth #Macroeconomics #Monetary economics #Rest (music) #Scope (computer science)
paper · doi:10.1257/aer.20181499
published in American Economic Review 110(11), 3549-3601 (American Economic Association)
openalex publication_date 2020/10/28 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/26
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 percent by size) are less cyclically sensitive than the rest. Second, high and rising concentration implies that the higher cyclicality of the bottom 99 percent of firms only has a modest impact on aggregate fluctuations. Third, differences in cyclicality are not simply explained by financing, and in fact appear largely unrelated to proxies for financial strength. We instead provide evidence for an alternative mechanism based on the industry scope of the very largest firms. (JEL D22, E32, G32, L25)