Working Paper presents research work by both Danmarks Nationalbank’s employees and our partners. The series is primarily targeted at professionals and people with an interest in central banking research as well as economics and finance in a broader sense.


Working Paper: Firm Cyclicality and Financial Frictions

Firms’ sensitivities to business cycles differ by size and age. The differences are large: “young and small firms” are more cyclical than large firms, whereas “old and small” firms are closer to acyclical. A heterogeneous-firm model with heterogeneous returns to scale can replicate these findings, and implies changes in the potency of different stabilisation policies.