Endogenous overhead costs, firm size, and fiscal shocks

Cheng‐wei Chang

Scottish Journal of Political Economy, 2020, vol. 67, issue 2, 223-230

Abstract: Recent empirical observations indicate that firm size responds to cyclical fluctuations in economic activities. By analyzing the effects of endogenous overhead costs in the economy, this paper finds that in response to a fiscal expansion, firm size will increase if the relationship between overhead costs and the number of firms is positive, while firm size will decrease if the relationship is negative.

Date: 2020
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