After a neutral technology shock, hours worked decline in a persistent manner in the UK. This response is robust to a variety of considerations in the recent literature: measures of labour input, level versus differenced hours in the VAR, small and large VARS, long- versus medium- run...

This paper shows that small firms inventory investment is substantially more sensitive (relative to large firms) to cash flow than previously recognized. Consequently, the strength of financing constraints on inventory investment may have been understated.