Farid Toubal, Julien Martin, Jörn Kleinert, 16 November 2013

A few large firms have disproportionate influence on economic fluctuations even in large countries. Such multinational firms are likely to transmit shocks across borders. This column argues that foreign affiliates drive the real business-cycle comovement between the region of location and the parent country. A few mechanisms explaining this link are presented.

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