Corporate Cash and Employment

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Serval ID
serval:BIB_9AFFCA0B13F2
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
Corporate Cash and Employment
Journal
American Economic Journal: Macroeconomics
Author(s)
Bacchetta P., Benhima K., Poilly C.
ISSN
1945-7707
Publication state
Published
Issued date
2019
Peer-reviewed
Oui
Volume
11
Number
3
Pages
30-66
Language
english
Abstract
In the aftermath of the U.S. financial crisis, both a sharp drop in employment and a surge in corporate cash have been observed. In this paper, based on U.S. 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.
Create date
07/09/2015 12:29
Last modification date
26/05/2020 6:20
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