This paper argues that firms' balance sheets were instrumental in the transmission of consumer demand shocks during the … firms experienced significantly larger employment losses in response to declines in local consumer demand. These results are … with more highly levered firms experienced significantly larger declines in employment in response to local consumer demand …

We argue that firms' balance sheets were instrumental in the propagation of consumer demand shocks during the Great … larger decline in employment in response to a drop in consumer demand. These results are not driven by firms being less … significantly larger job losses in response to county-wide consumer demand shocks. Thus, firms' balance sheets also matter for …