We examine a model of the size distribution and growth of firms whereby firms learn about idiosyncratic productivity parameters. Aggregate shocks, by adding noise to learning at the firm level, can produce differentiated response across firms with their reactions depending on the position of the...

Previous research indicates that the differences between large and small firms should be more pronounced during economic down turns. However, although many studies have emphasized equilibrium models with heterogeneous firms and financial frictions, little research has focused on the separate...