Firms and Shocks: Evidence from France

We document how different shocks affect firms of different characteristics. We use a rich panel data set of French firms that allows us to disentangle market-ofdestination shocks, country-of-origin shocks, as well as firm-specific shocks. We consider the differential impact of such shocks on firms of different characteristics: size, ownership status (domestic versus foreign), and international exposure (exporter versus non-exporters). We further exploit the panel dimension of the data by documenting the differential response to shocks when the firm changes status (e.g. non-exporter to exporter, domestic to foreign). The data span the period 1999-2007 and are the result of nesting several data sets on firms located in France: balance sheet data (called BRN), trade data (Custom authorities), and data on the firms’ ownership and their financial linkages (LiFi). The data are almost exhaustive. We follow the variance decomposition procedure proposed by Koren and Tenreyro (2008) to quantify the importance of the different sources of shocks on firms with different characteristics. We find that responses to different shocks are very heterogeneous across different groups of firms.