The Fiscal Multiplier of Public Investment: The Role of Corporate Balance Sheet-Reference-Cited by-同舟云学术

The Fiscal Multiplier of Public Investment: The Role of Corporate Balance Sheet

Published:2024-01-01 Issue:1 Volume:24 Page:489-527
ISSN:1935-1690
Container-title:The B.E. Journal of Macroeconomics
language:en
Short-container-title:

Author:

Espinoza Raphael¹,Gamboa-Arbelaez Juliana²,Sy Mouhamadou¹^ORCID

Affiliation:

1. 8385 International Monetary Fund , 700 19th St NW , Washington , DC 20431 , USA

2. University of Minnesota , 3-133 Hanson Hall, 1925 Fourth Street South , Minneapolis , MN 55455 , USA

Abstract

Abstract This paper explores whether public investment crowds out or crowds in private investment. To this aim, we build a database of about half a million firms from 49 countries. We find that the effect of public investment on corporate investment depends on leverage, liquidity constraint, and firm’s operating (labor) efficiency. In line with theory, public investment boosts private investment for firms with low leverage, but not for firms with high leverage, for firms that are financially constrained or that have low operating efficiency.

Publisher

Walter de Gruyter GmbH

Link

https://www.degruyter.com/document/doi/10.1515/bejm-2023-0077/pdf

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