The article examines how fluctuations in firm-level productivity affect the financial conditions of U.S. non-financial firms. By using a financial model, the researchers found that risk shocks can lead to significant changes in leverage, a financial measure linked to real economic activity. However, these risk shocks only play a minor role in overall GDP fluctuations, with standard productivity shocks being the main driver of real economic changes. This highlights a key distinction in financial models: while risk shocks impact financial conditions, they have limited impact on overall economic activity.