Firm Resiliency: The Role of Spillovers

Meghana Ayyagari, Yuxi Cheng, and Ariel Weinberger

♦ Using high-frequency data on over 7 million import transactions, we study the disruptions to US firms’ trade patterns and growth immediately following the initial COVID-19 trade shock. While large firms are not direct recipients of government fiscal support, they see fewer disruptions if located in counties where small businesses (SMEs) receive government stimulus loans under the Paycheck Protection Program. These effects are largest in counties with greater share of SMEs and stronger input-output linkages between large firms and SMEs. Our results point to local spillovers between SMEs and large firms as being an important determinant of firm resiliency during crises.