serval:BIB_9AFFCA0B13F2
Corporate Cash and Employment
10.1257/mac.20150191
000473285800002
Bacchetta
P.
author
Benhima
K.
author
Poilly
C.
author
article
2019
American Economic Journal: Macroeconomics
1945-7707
journal
11
3
30-66
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.
eng
60_published
peer-reviewed
University of Lausanne
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