We study the effects of financial frictions on firm exit when firms face large liquidity shocks. We develop a simple model of firm cost-minimization that introduces a financial friction that limits firms' borrowing capacity to smooth temporary shocks to liquidity. In this framework, firm exit...

We study the effects of fiscal policy in response to the COVID-19 pandemic at the firm, sector, country and global levels. First, we estimate the impact of COVID-19 and policy responses on small and medium-sized enterprise (SME) business failures. We combine firm-level financial data from 50...