Corporate Cash and Employment

Philippe Bacchetta, Kenza Benhima and Céline Poilly ()

American Economic Journal: Macroeconomics, 2019, vol. 11, issue 3, 30-66

Abstract: In the aftermath of the US financial crisis, both a sharp drop in employment and a surge in corporate cash have been observed. In this paper, based on US data, we argue that the negative relationship between the corporate cash ratio and employment is systematic, both over time and across firms. We develop a dynamic general equilibrium model where heterogenous firms need cash and external liquid funds in their production process. We analyze the dynamic impact of aggregate shocks and the cross-firm impact of idiosyncratic shocks. We show that external liquidity shocks generate a negative comovement between the cash ratio and employment, as documented in the data.

JEL-codes: E24 E32 G32 J23 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mac.20150191
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Citations: View citations in EconPapers (25)

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Related works:
Working Paper: Corporate Cash and Employment (2019)
Working Paper: Corporate Cash and Employment (2014)
Working Paper: Corporate Cash and Employment (2014)
Working Paper: Corporate Cash and Employment (2014)
Working Paper: Corporate Cash and Employment (2014)
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