Financial Constraints and Firm Size: Micro-Evidence and Aggregate Implications

Miguel Ferreira, Timo Haber and Christian Rorig

Working Papers from DNB

Abstract: Using a unique dataset covering the universe of Portuguese firms and their credit situation we show that financially constrained firms are found across the entire firmsize distribution, even in the top 1%. Incorporating a richer, empirically supported, productivity process into a standard heterogeneous firms model generates a joint distribution of size and credit constraints in line with the data. The presence of large constrained firms in the economy, together with their elevated capital share, explains about 66% of the response of output to a financial shock. We conclude by providing microevidence in support of themodel mechanism.

Keywords: Firmsize; business cycle; financial accelerator (search for similar items in EconPapers)
JEL-codes: E22 E23 E62 (search for similar items in EconPapers)
Date: 2023-05
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ent and nep-sbm
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Related works:
Working Paper: Financial Constraints and Firm Size: Micro-Evidence and Aggregate Implications (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:777

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