The researchers analyzed US economic data from 1954 to 2004 to understand the impact of financial frictions on the economy. They found that the external finance premium, a key factor in financial theories, can be estimated using non-financial data. This estimate captures over 70% of the changes in corporate bond spreads. By including financial frictions in their model, the researchers were able to better predict key economic indicators and show how economic shocks are influenced by these financial factors.