Papers Containing Keywords(s): 'crisis'
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Viewing papers 1 through 10 of 10
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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 PaperCleansing Floods? Creative Destruction and Government Spending After Disasters
August 2026
Working Paper Number:
CES-26-52
Disasters devastate economies, yet productivity can improve in their wake. Why? Using confidential plant-level microdata from the US Census Bureau and an event study design, I trace the creative destruction process that follows large federally declared floods. Exits are concentrated among the least productive plants, whose used machines are then acquired by high-productivity entrants. Survivors upgrade their machinery as they rebuild and see productivity gains. Federal disaster spending facilitates this process by expanding financing access for nimble young and small firms that disproportionately fuel productive reallocation. Without it, financing constraints stifle creative destruction and productivity declines. Ultimately, the relative income gains from federal disaster assistance generate tax revenues far exceeding the policy's upfront cost, making it both efficiency-enhancing and fiscally sound. My findings reveal a novel allocative efficiency channel through which government spending supports post-disaster recovery, with critical implications for a warming world.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 PaperBusiness Formation: A Tale of Two Recessions
January 2021
Working Paper Number:
CES-21-01
The trajectory of new business applications and transitions to employer businesses differ markedly during the Great Recession and COVID-19 Recession. Both applications and transitions to employer startups decreased slowly but persistently in the post-Lehman crisis period of the Great Recession. In contrast, during the COVID-19 Recession new applications initially declined but have since sharply rebounded, resulting in a surge in applications during 2020. Projected transitions to employer businesses also rise but this is dampened by a change in the composition of applications in 2020 towards applications that are more likely to be nonemployers.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 PaperThe Great Recession and a Missing Generation of Exporters
August 2018
Working Paper Number:
CES-18-33
The collapse of international trade surrounding the Great Recession has garnered significant attention. This paper studies firm entry and exit in foreign markets and their role in the post-recession recovery of U.S. exports using confidential microdata from the U.S. Census Bureau. We find that incumbent exporters account for the vast majority of the decline in export volumes during the crisis. The recession also induced a missing generation of exporters, with large increases in exits and a substantial decline in entries into foreign markets. New exporters during these years tended to have larger export volumes, however, compensating for the decline in the number of exporting firms. Thus, while entry and exit were important for determining the variety of U.S. goods that were exported, they were less important for the trajectory of aggregate foreign sales.View Full Paper PDF
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Working PaperFLUCTUATIONS IN UNCERTAINTY
March 2014
Working Paper Number:
CES-14-17
This review article tries to answer four questions: (i) what are the stylized facts about uncertainty over time; (ii) why does uncertainty vary; (iii) do fluctuations in uncertainty matter; and (iv) did higher uncertainty worsen the Great Recession of 2007-2009? On the first question both macro and micro uncertainty appears to rise sharply in recessions. On the second question the types of exogenous shocks like wars, financial panics and oil price jumps that cause recessions appear to directly increase uncertainty, and uncertainty also appears to endogenously rise further during recessions. On the third question, the evidence suggests uncertainty is damaging for short-run investment and hiring, but there is some evidence it may stimulate longer-run innovation. Finally, in terms of the Great Recession, the large jump in uncertainty in 2008 potentially accounted for about one third of the drop in GDP.View Full Paper PDF
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Working PaperDecomposing Aggregate Trade Flows: New Evidence from U.S. Traders
September 2012
Working Paper Number:
CES-12-17
Using firm-level data on export transactions, we uncover a rich set of results about the extensive margins of exporting and exporter responses during periods of global downturns. We perform our analysis with respect to firm size, age, ownership status, and sector to emphasize the role of firm heterogeneity. We uncover a larger role for firm entry and exit in changes in annual export flows of single-unit, smaller, and younger firms. Young, small firms perform best during both periods of crises as well as non-crises periods. We also decompose the margins of U.S. imports at the U.S. importer, foreign supplier, and U.S. importer-foreign supplier pair levels. While export flows are closely correlated with global business cycles, import flows more closely approximate U.S. economic cycles. Additionally, both pair and foreign supplier flows are far more volatile than U.S. import flows, that is, U.S. importer-foreign supplier matches experience more churning on average than do either U.S. importers or foreign suppliers.View Full Paper PDF
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Working PaperBank Crises and Investor Confidence
January 2009
Working Paper Number:
CES-09-02
In addition to their direct effects, episodes of financial instability may decrease investor confidence. Measuring the impact of a crisis on investor confidence is complicated by the fact that it is difficult to disentangle the effect of investor confidence from coincident direct effects of the crisis. In order to isolate the effects of financial crises on investor confidence, we study the investment behavior of immigrants in the U.S. Our findings indicate that systemic banking crises have important effects on investor behavior. Immigrants who have experienced a banking crisis in their countries of origin are significantly less likely to have bank accounts in the U.S. This finding is robust to including important individual controls like wealth, education, income, and age. In addition, the effect of crises is robust to controlling for a variety of country of origin characteristics, including measures of financial and economic development and specifications with country of origin fixed effects.View Full Paper PDF
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