Government Spending Shocks and Private Sector Innovation PDF Download

Author: Ruchith Dissanayake
Publisher:
ISBN:
Category :
Languages : en
Pages : 0

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Book Description
Increases in defense spending - the largest portion of discretionary government spending in the U.S. - are negatively associated with private sector firm innovation measured using various patent-based proxies. A central finding in our study is that the extent to which government spending hinders firm innovation is dependent on a firm's cash flow sensitivity to consumer demand. In addition, we document that the negative effects of this mechanism are stronger for firms with low tangible collateral that rely on internal cash flow to finance innovation projects. The aggregate demand mechanism operates independently of the resource diversification and public debt crowding-out mechanisms documented in prior studies. Our results are robust to alternative measures of firm innovation and different estimation methodologies.

Author: Mr.Nooman Rebei
Publisher: International Monetary Fund
ISBN: 147558606X
Category : Business & Economics
Languages : en
Pages : 31

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Book Description
We empirically revisit the crowding-in effect of government spending on private consumption based on rolling windows of U.S. data. Results show that in earlier samples government spending is increasingly crowding in private consumption; however, this relation is reverted in the latest periods. We propose a model embedding non-separable public and private consumption in the utility function and rule-of-thumb consumers to assess the sources of non-monotonic changes in the transmission of the shock. The iterative full information estimation of the model reveals that changes in the co-movement between private and public spending is primarily driven by the fluctuations in the elasticity of substitution between private and public consumption, the share of financially constrained consumers, and the elasticity of intertemporal substitution.

Author: Bijie Jia
Publisher:
ISBN:
Category :
Languages : en
Pages :

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Author: Shafik Hebous
Publisher: International Monetary Fund
ISBN: 1513578723
Category : Business & Economics
Languages : en
Pages : 33

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We study the effects of federal purchases on firms’ investment using a novel panel dataset that combines federal procurement contracts in the United States with key financial firm-level information. We find that 1 dollar of federal spending increases firms’ capital investment by 7 to 11 cents. The average effect masks heterogeneity: Effects are stronger for firms that face financing constraints and they are close to 0 for unconstrained firms. In line with the financial accelerator model, our findings indicate that the effect of government purchases works through easing firms’ access to external borrowing. Furthermore, industry-level analysis suggests that that the increase in investment at the firm level translates into an industry-wide effect without crowding-out capital investment of other firms in the same industry.

Author: Alessio Moro
Publisher:
ISBN:
Category :
Languages : en
Pages : 62

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Este artículo documenta un aumento secular en la proporción de compras del sector privado en el gasto de consumo del gobierno: con el tiempo, el gobierno compra relativamente más bienes del sector privado y depende menos de su propia producción de valor agregado. Construimos un modelo de equilibrio general en el que el cambio tecnológico específico de la inversión explica la variación en la estructura del gasto público. El modelo predice que este proceso secular altera la transmisión de los shocks de gasto público, al aumentar la respuesta del valor añadido privado, mientras que la respuesta de las horas trabajadas se reduce. Validamos estos resultados con evidencia empírica novedosa sobre los efectos del gasto público.

Author: Lauren Cohen
Publisher:
ISBN:
Category : Downsizing of organizations
Languages : en
Pages : 0

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Abstract: This paper employs a new empirical approach for identifying the impact of government spending on the private sector. Our key innovation is to use changes in congressional committee chairmanship as a source of exogenous variation in state-level federal expenditures. In doing so, we show that fiscal spending shocks appear to significantly dampen corporate sector investment and employment activity. These corporate reactions follow both Senate and House committee chair changes, are present among large and small firms and within large and small states, are partially reversed when the congressman resigns, and are most pronounced among geographically-concentrated firms. The effects are economically meaningful and the mechanism - entirely distinct from the more traditional interest rate and tax channels - suggests new considerations in assessing the impact of government spending on private sector economic activity

Author:
Publisher:
ISBN: 9789289922128
Category :
Languages : en
Pages : 44

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We investigate the effects of fiscal policy communication on the propagation of government spending shocks. To this aim, we propose a new index measuring the coordination effects of policy communication on private agents' expectations. This index is based on the disagreement amongst US professional forecasters about future government spending. The underlying intuition is that a clear fiscal policy communication can coalesce expectations, reducing disagreement. Results indicate that, in times of low disagreement, the output response to fiscal spending innovations is positive and large, mainly due to private investment response. Conversely, periods of elevated disagreement are characterised by muted output response.

Author: Mr.Sohrab Rafiq
Publisher: International Monetary Fund
ISBN: 1484337913
Category : Business & Economics
Languages : en
Pages : 48

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This paper examines the size of the fiscal multiplier values generated in Malaysia. The results show that a government spending shock leads to broad positive economic effects. Although, the effectiveness of fiscal policy alters across macroeconomic states. The estimates show that since the Asian financial crisis the medium- and long-run effect of fiscal policy spending has declined. Some of this is down to greater credit availability and less investment spending.

Author: Tim Campbell
Publisher: World Bank Publications
ISBN:
Category : Political Science
Languages : en
Pages : 48

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Book Description
Urban Management Programme Policy Paper No. 22. Understanding how the poor respond to economic crisis has become increasingly important, especially for governments and donors faced with the problems of poverty in countries experiencing economic difficulties. This understanding can help ensure that interventions aimed at reducing poverty complement and strengthen people's own inventive solutions rather substitute for or block them. This second volume belongs to a four-volume set of case studies that presents the main findings from four very different communities: Cisne Dos, Guayaquil, Ecuador; Angyalfold, Budapest, Hungary; Commonwealth, Metro Manila, Philippines; and Chawama, Lusaka, Zambia. The studies were primarily conducted during the 1980s, a time when all four countries were experiencing economic difficulties. Each study examines how poor households adjust to a deteriorating situation, what strategies they adopt to limit the impact of shocks and generate additional resources, and what constraints impede their actions. The studies also incorporate the concept of vulnerability to capture the aspects of changing socioeconomic well-being. To assess vulnerability, a simple classification of tangible and nontangible assets was developed--labor, human capital, productive assets, household relations, and social capital. The studies map out factors that can affect each of the assets on an asset vulnerability matrix to identify indicators of increasing and decreasing vulnerability. Key findings of the studies reveal how the poor benefit when they use their assets effectively and what happens when those assets are eroded or depleted.

Author: International Monetary Fund
Publisher: International Monetary Fund
ISBN: 1455200808
Category : Business & Economics
Languages : en
Pages : 32

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This paper examines the relationship between fiscal policy and the current account, drawing on a larger country sample than in previous studies and using panel regressions, vector autoregressions, and an analysis of large fiscal and external adjustments. On average, a strengthening in the fiscal balance by 1 percentage point of GDP is associated with a current account improvement of 0.2–0.3 percentage point of GDP. This association is as strong in emerging and low-income countries as it is in advanced economies; and significantly higher when output is above potential.