Do Financial Market Imperfections Affect the Cyclicality of Employment?

João Miguel Ejarque ()

No 02-10, Discussion Papers from University of Copenhagen. Department of Economics

Abstract: In this paper I show that the idea that firms faced with a liquidity constraint display "excess sensitivity" of employment to shocks is not correct. The employment decision is independent of the financing constraint and artificial data shows that there is no such excess sensitivity.

Keywords: employment volatility; investment; Q theory (search for similar items in EconPapers)
JEL-codes: E22 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mfd
Date: 2002-10

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