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The growth of multinational firms in the Great Recession

Listed author(s):
  • Javier Cravino

    (University of Michigan)

We investigate how multinational firms performed during the latest global recession, using a unique firm-level dataset covering 8 million firms in 34 countries over the period 2004-2012. We document that the foreign affiliates of multinational firms grew faster than local firms both before and after the crisis, but that this faster growth was interrupted during the crisis. We explore the mechanisms for this decline in multinational activity and show that multinational firms from certain source countries did systematically worse during the crisis. Building on these results, we use a quantitative model to assess the role of foreign multinational firms in propagating the global recession across countries.

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File URL: https://economicdynamics.org/meetpapers/2016/paper_512.pdf
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Paper provided by Society for Economic Dynamics in its series 2016 Meeting Papers with number 512.

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Date of creation: 2016
Handle: RePEc:red:sed016:512
Contact details of provider: Postal:
Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA

Web page: http://www.EconomicDynamics.org/
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  1. Julian di Giovanni & Andrei A. Levchenko & Isabelle Mejean, 2014. "Firms, Destinations, and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 82(4), pages 1303-1340, 07.
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  4. Rudolfs Bems & Robert C Johnson & Kei-Mu Yi, 2010. "Demand Spillovers and the Collapse of Trade in the Global Recession," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 58(2), pages 295-326, December.
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  7. Sam Kortum & John Romalis & Brent Neiman & Jonathan Eaton, 2010. "Trade and the Global Recession," 2010 Meeting Papers 1340, Society for Economic Dynamics.
  8. Javier Cravino & Andrei A. Levchenko, 2015. "Multinational Firms and International Business Cycle Transmission," Working Papers 643, Research Seminar in International Economics, University of Michigan.
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  10. Mark Gertler & Simon Gilchrist, 1991. "Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms," NBER Working Papers 3892, National Bureau of Economic Research, Inc.
  11. Andrei A. Levchenko & Logan T. Lewis & Linda L. Tesar, 2010. "The Collapse of International Trade During the 2008-2009 Crisis: In Search of the Smoking Gun," NBER Working Papers 16006, National Bureau of Economic Research, Inc.
  12. Greenwood, Jeremy & Hercowitz, Zvi & Huffman, Gregory W, 1988. "Investment, Capacity Utilization, and the Real Business Cycle," American Economic Review, American Economic Association, vol. 78(3), pages 402-417, June.
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  14. Ramondo, Natalia, 2014. "A quantitative approach to multinational production," Journal of International Economics, Elsevier, vol. 93(1), pages 108-122.
  15. Sutton, John, 2002. "The variance of firm growth rates: the ‘scaling’ puzzle," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 312(3), pages 577-590.
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