Consumption risk sharing among U.S. federal states increases in booms and decreases in recessions. We find that small … firms' access to credit markets plays an important role in explaining this stylized fact: business cycle fluctuations in … aggregate risk sharing are more pronounced in states in which small firms account for a large share income or employment. In …

corporate credit risk relative to the US, and when european firms value more than US firms the flexibility and information …"We present a dynamic general equilibrium model with agency costs where: i) firms are heterogeneous in the risk of …