Article | NBER Macroeconomics Annual | 2005

The Rise in Firm-Level Volatility: Causes and Consequences

by Diego Comin and Thomas Philippon


We document that the recent decline in aggregate volatility has been accompanied by a large increase in firm level risk. The negative relationship between firm and aggregate risk seems to be present across industries in the US, and across OECD countries. Firm volatility increases after deregulation. Firm volatility is linked to research and development spending as well as access to external financing. Further, R&D intensity is also associated with lower correlation of sectoral growth with the rest of the economy.

Keywords: Volatility; Risk Management; Relationships; Research and Development; Financing and Loans; Industry Growth; Governing Rules, Regulations, and Reforms; Economy; Outcome or Result; United States;


Comin, Diego, and Thomas Philippon. "The Rise in Firm-Level Volatility: Causes and Consequences." NBER Macroeconomics Annual 20 (2005). (Read an article about this paper in The Washington Post, Newsweek and The Charlotte Observer.)