Firms ’ Internal Networks and Local Economic Shocks ∗

  title={Firms ’ Internal Networks and Local Economic Shocks ∗},
  author={Xavier Giroud and Holger M. M{\"u}ller},
This paper shows that firms’ internal networks of establishments constitute an important channel through which local shocks propagate across U.S. regions. Using confidential data at the establishment level from the U.S. Census Bureau, we find that local establishment-level employment responds strongly to shocks in distant regions in which the firm is operating. Consistent with theory, the elasticity with respect to such shocks is increasing in firms’ financial constraints. To account for… CONTINUE READING


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In column (3), FC is the financial constraints index of Whited and Wu (2006)

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