Papers Containing Keywords(s): 'shock'
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Viewing papers 1 through 10 of 22
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Working PaperResilience After Climate Shocks: Evidence From SBA Disaster Loans
September 2026
Working Paper Number:
CES-26-58
We show that natural disasters generate persistent declines in U.S. county employment and net job creation. We then examine whether emergency credit can mitigate these effects. Linking the universe of SBA disaster-loan applications to Census Bureau records, we exploit a credit-score screening rule introduced in 2016 and implement a fuzzy regression discontinuity design around the score cutoff. Firms just above the threshold are substantially more likely to receive government-backed loans, and approval increases employment relative to declined applicants, with effects persisting over subsequent years. The adjustment operates primarily through lower job destruction, while reduced firm exit and stronger job creation also contribute. Overall, SBA lending preserved an estimated 9.8% of the jobs that would otherwise have been lost in disaster-affected counties.View Full Paper PDF
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Working PaperHow Shocks Travel: the Cross-Border Impact of Natural Disasters in Firm Networks
August 2026
Working Paper Number:
CES-26-55
Do the boundaries of the multinational firm shape how shocks propagate through global production networks? We link U.S. Bill of Lading microdata, geocoded natural disaster records, and cross-border ownership data to trace the transmission of exogenous supply disruptions from foreign suppliers to U.S. importers. Exploiting the quasi-random timing and location of natural disasters in a staggered event-study design, we document that disasters abroad generate sharp, persistent export declines at affected suppliers'shocks that propagate downstream, reducing the growth rate of U.S. importers' total purchases by up to 25 percentage points. Transmission, however, is far from uniform: non-MNC buyers contract roughly twice as much as importers belonging to global corporations, and a comparable gap separates arm's-length from intra-firm trade. These patterns point to the internal networks of multinational firms as shock absorbers that attenuate and redirect supply-side disruptions'suggesting that firm boundaries are not merely organizational choices, but also determinants of macroeconomic resilience.View Full Paper PDF
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Working PaperTrade and Welfare (across Local Labor Markets)
February 2026
Working Paper Number:
CES-26-16
What are the welfare implications of trade shocks? Theoretically, we provide a sufficient statistic that measures changes in welfare (to a first-order approximation) for the set of workers who start within a region, taking into account adjustment in frictional unemployment, labor force participation, the sectors to which workers apply for jobs, and the regions in which workers choose to live. Our theory is flexible; for instance, it allows for arbitrary heterogeneity in worker productivity and non-pecuniary returns (amenities) across unemployment, labor force non-participation, sectors, and regions. Empirically, we apply these insights to measure changes in welfare between 2000-2007 across workers who start in different commuting zones (CZs) in the U.S. in the year 2000. Finally, we identify the differential impact across CZs of a particular trade shock: granting China permanent normal trade relations.View Full Paper PDF
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Working PaperA Shock by Any Other Name? Reconsidering the Impacts of Local Demand Shocks
February 2026
Working Paper Number:
CES-26-10
Over the last decade, research on labor market adjustment following local demand shocks has expanded to explore a wide variety of measured shocks. However, the worker adjustments observed in response to these shocks are not always consistent across studies. We create a harmonized set of annual commuting-zone-level shocks following the major approaches in the literature to investigate these differences. As one might expect, shocks of different types exhibit different geographic and temporal patterns and are generally weakly correlated with each other. We find they also generate different employment and migration responses, with trade-related shocks showing little response on either margin, while more general Bartik-style shocks are associated with economically meaningful changes in both employment and migration.View Full Paper PDF
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Working PaperThe Effect of Oil News Shocks on Job Creation and Destruction
January 2025
Working Paper Number:
CES-25-06
Using data from the Annual Survey of Manufactures (ASM) and the Census of Manufacturing (CMF), we construct quarterly measures of job creation and destruction by 3-digit NAICS industries spanning from 1980Q3-2016Q4. These long series allow us to address three questions regarding the effect of oil news shocks. What is the average effect of oil news shocks on sectoral labor reallocation? What characteristics explain the observed heterogeneity in the average responses across industries? Has the response of US manufacturing changed over time? We find evidence that oil news shocks exert only a moderate effect on total manufacturing net employment growth but lead to a significant increase in job reallocation. However, we find a high degree of heterogeneity in responses across industries. We then show that the cross-industry variation in the sensitivity of net employment growth and excess job reallocation to oil news shocks is related to differences in energy costs, the rate of energy to capital expenditures, and the share of mature firms in the industry. Finally, we illustrate how the dynamic response of sectoral job creation and destruction to oil news shocks has declined since the mid-2000s.View Full Paper PDF
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Working PaperContrasting the Local and National Demographic Incidence of Local Labor Demand Shocks
July 2024
Working Paper Number:
CES-24-36
This paper examines how spatial frictions that differ among heterogeneous workers and establishments shape the geographic and demographic incidence of alternative local labor demand shocks, with implications for the appropriate level of government at which to fund local economic initiatives. LEHD data featuring millions of job transitions facilitate estimation of a rich two-sided labor market assignment model. The model generates simulated forecasts of many alternative local demand shocks featuring different establishment compositions and local areas. Workers within 10 miles receive only 11.2% (6.6%) of nationwide welfare (employment) short-run gains, with at least 35.9% (62.0%) accruing to out-of-state workers, despite much larger per-worker impacts for the closest workers. Local incidence by demographic category is very sensitive to shock composition, but different shocks produce similar demographic incidence farther from the shock. Furthermore, the remaining heterogeneity in incidence at the state or national level can reverse patterns of heterogeneous demographic impacts at the local level. Overall, the results suggest that reduced-form approaches using distant locations as controls can produce accurate estimates of local shock impacts on local workers, but that the distribution of local impacts badly approximates shocks' statewide or national incidence.View Full Paper PDF
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Working PaperAfter the Storm: How Emergency Liquidity Helps Small Businesses Following Natural Disasters
April 2024
Working Paper Number:
CES-24-20
Does emergency credit prevent long-term financial distress? We study the causal effects of government-provided recovery loans to small businesses following natural disasters. The rapid financial injection might enable viable firms to survive and grow or might hobble precarious firms with more risk and interest obligations. We show that the loans reduce exit and bankruptcy, increase employment and revenue, unlock private credit, and reduce delinquency. These effects, especially the crowding-in of private credit, appear to reflect resolving uncertainty about repair. We do not find capital reallocation away from neighboring firms and see some evidence of positive spillovers on local entry.View Full Paper PDF
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Working PaperCompositional Nature of Firm Growth and Aggregate Fluctuations
March 2020
Working Paper Number:
CES-20-09
This paper studies firm dynamics over the business cycle. I present evidence from the United Kingdom that more rapidly growing firms are born in expansions than in recessions. Using administrative records from Census data, I find that this observation also holds for the last four recessions in the United States. I also present suggestive evidence that financial frictions play an important role in determining the types of firms that are born at different stages of the business cycle. I then develop a general equilibrium model in which firms choose their managers' span of control at birth. Firms that choose larger spans of control grow faster and eventually get to be larger, and in this sense have a larger target size. Financial frictions in the form of collateral constraints slow the rate at which firms reach their target size. It takes firms longer to get up to scale when collateral constraints tighten; therefore, businesses with the largest target size are affected disproportionately more. Thus, fewer entrepreneurs find it profitable to choose larger projects when financial conditions deteriorate. Using Bayesian methods, I estimate the model using micro and aggregate data from the United Kingdom. I find that financial shocks account for over 80% of fluctuations in the formation of businesses with a large target size, and TFP and labor wedge shocks account for the remaining 20%. An independently estimated version of the model with no choice over the span of control needs larger aggregate shocks in order to account for the same data series, suggesting that the intensive margin of business formation is important at business cycle frequencies. The model with the choice over the span of control generates an empirically relevant and non-targeted collapse in the right tail of the cumulative growth distribution among firms started in recessions, while the model without such a choice does not. The paper also discusses implications for micro-targeted government stimulus policies.View Full Paper PDF
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Working PaperSmall and Large Firms Over the Business Cycle
February 2018
Working Paper Number:
CES-18-09
Drawing on a new, con dential Census Bureau dataset of financial statements of a representative sample of 80000 manufacturing firms from 1977 to 2014, we provide new evidence on the link between size, cyclicality, and financial frictions. First, we only find evidence of lower cyclicality among the very largest firms (the top 1% by size). Second, due to high and rising concentration of sales and investment, the lower sensitivity of the top 1% firms dominates the behavior of aggregate fluctuations. Third, we show that this differential sensitivity does not appear to be driven by financial frictions. The higher sensitivity of the bottom 99% does not disappear after controlling for measures of financial strength, is not statistically significant after identified monetary policy shocks, and does not appear in debt financing flows. Evidence from 3-digit industries suggests a non-financial explanation: the largest 1% of firms are less sensitive due to a more diversified customer base.View Full Paper PDF
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Working PaperFirm-to-Firm Relationships and Price Rigidity Theory and Evidence
January 2017
Working Paper Number:
CES-17-33
Economists have long suspected that firm-to-firm relationships might increase price rigidity due to the use of explicit or implicit fixed-price contracts. Using transaction-level import data from the U.S. Census, I study the responsiveness of prices to exchange rate changes and show that prices are in fact substantially more responsive to these cost shocks in older versus newly formed relationships. Based on additional stylized facts about a relationship's life cycle and interviews I conducted with purchasing managers, I develop a model in which a buyer-seller pair subject to persistent, stochastic shocks to production costs shares profit risk under limited commitment. Once structurally estimated, the model replicates the empirical correlation between relationship age and the responsiveness of prices to shocks. My results suggest that changes to the average length of relationships in the economy - e.g., in a recession, when the share of young relationships declines - can influence price flexibility and hence the effectiveness of monetary policy.View Full Paper PDF
