Abstract
Abstract
Using data on nearly 20,000 restaurants in China during the COVID-19 outbreak, we find evidence that the government-sponsored rent reduction program reduced debt overhang problems. Rent reductions, which averaged 36,000 RMB per restaurant, increase the open rate of restaurants by 3.7%, revenue by 11,000 RMB, and the number of employees by 0.36. Larger restaurants with higher committed costs benefit more from the rent reduction. The stimulus has a positive spillover effect that boosts the revenue of restaurants in the immediate vicinity of subsidized restaurants. The treatment effect varies with organizational structure in a manner consistent with an information frictions hypothesis.
Publisher
Cambridge University Press (CUP)
Subject
Economics and Econometrics,Finance,Accounting
Reference31 articles.
1. Government Spending Multipliers in Good Times and in Bad: Evidence from US Historical Data;Ramey;Journal of Political Economy,2018
2. Xiong, W. “The Mandarin Model of Growth.” NBER Working Paper No. 25296 (2018).
3. Granja, J. ; Makridis, C. ; Yannelis, C. ; and Zwick, E. . “Did the Paycheck Protection Program Hit the Target?” Journal of Financial Economics, 145 (2022), 725–761.
4. Ownership, Agency, and Wages: An Examination of Franchising in the Fast Food Industry;Krueger;Quarterly Journal of Economics,1991
5. The Role of Government in Firm Outcomes;Duchin;Review of Financial Studies,2020