IMF Economic Review

, Volume 61, Issue 3, pp 520–559 | Cite as

How Firms Respond to Business Cycles: The Role of Firm Age and Firm Size

  • Teresa C Fort
  • John Haltiwanger
  • Ron S Jarmin
  • Javier Miranda


There remains considerable debate in the theoretical and empirical literature about the differences in the cyclical dynamics of firms by firm size. This paper contributes to the debate in two ways. First, the key distinction between firm size and firm age is introduced. The evidence presented in this paper shows that young businesses (that are typically small) exhibit very different cyclical dynamics than small/older businesses. The second contribution is to present evidence and explore explanations for the finding that young/small businesses were hit especially hard in the Great Recession. The collapse in housing prices accounts for a significant part of the large decline of young/small businesses in the Great Recession.

JEL Classifications

E32 E24 D22 L26 


Supplementary material

41308_2013_BFimfer201315_MOESM1_ESM.pdf (439 kb)
Online appendix (2.6 mb)
Work files for online appendix


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Copyright information

© International Monetary Fund 2013

Authors and Affiliations

  • Teresa C Fort
  • John Haltiwanger
  • Ron S Jarmin
  • Javier Miranda

There are no affiliations available

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