Universität zu Köln

Hebous, Shafik and Zimmermann, Tom (2021). Can government demand stimulate private investment? Evidence from US federal procurement. J. Monetary Econ., 118. S. 178 - 195. AMSTERDAM: ELSEVIER. ISSN 1873-1295

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Abstract

Demand shocks lower firm financing premiums by increasing the present value of cash flow, thereby easing firm financing constraints. We study the effects of unanticipated federal spending shocks on firm investment in the United States using a novel panel dataset that combines federal procurement contracts with key financial firm-level information. Consistent with the financial accelerator model, our results suggest that 1 dollar of federal purchases increases capital investment of financially constrained firms by 10 to 13 cents over a horizon of 4 quarters, but has no effect on investment of unconstrained firms. (c) 2020 International Monetary Fund. Published by Elsevier B.V.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Hebous, Shafik UNSPECIFIED UNSPECIFIED UNSPECIFIED Zimmermann, Tom UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-570789
DOI:	10.1016/j.jmoneco.2020.09.005
Journal or Publication Title:	J. Monetary Econ.
Volume:	118
Page Range:	S. 178 - 195
Date:	2021
Publisher:	ELSEVIER
Place of Publication:	AMSTERDAM
ISSN:	1873-1295
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language FINANCIAL FRICTIONS; FISCAL-POLICY; SPENDING MULTIPLIER; SENSITIVITY; CONSTRAINTS; SHOCKS; CASH Multiple languages Business, Finance; Economics Multiple languages
URI:	http://kups.ub.uni-koeln.de/id/eprint/57078