Event Details

"Multinational Firms and the International Transmissionof Crises: The Real Economy Channel"

Abstract: We study how multinational companies transmit negative shocks from theirsubsidiaries located in crisis countries to subsidiaries in non-crisis countries. We find thatinvestment is 18% lower in non-crisis subsidiaries of these parents relative to the sameindustry,same-country subsidiaries of parents that are headquartered in the same parentcountry but do not have a subsidiary in a crisis country. Employment growth rate in theaffected subsidiaries is zero or negative while it is 1.4% in the subsidiaries of unaffectedparents. The aggregate industry-level sales and employment are also negatively impactedin countries of the affected subsidiaries.