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Cyclical fiscal policy, credit constraints, and industry growth


Aghion, Philippe; Hémous, David; Kharroubi, Enisse (2014). Cyclical fiscal policy, credit constraints, and industry growth. Journal of Monetary Economics, 62:41-58.

Abstract

What are the effects of cyclical fiscal policy on industry growth? We show that industries with a relatively heavier reliance on external finance or lower asset tangibility tend to grow faster (in terms of both value added and of labor productivity growth) in countries that implement fiscal policies that are more countercyclical. We reach this conclusion using Rajan and Zingales׳s (1998) difference-in-difference methodology on a panel data sample of manufacturing industries across 15 OECD countries over the period 1980–2005.

Abstract

What are the effects of cyclical fiscal policy on industry growth? We show that industries with a relatively heavier reliance on external finance or lower asset tangibility tend to grow faster (in terms of both value added and of labor productivity growth) in countries that implement fiscal policies that are more countercyclical. We reach this conclusion using Rajan and Zingales׳s (1998) difference-in-difference methodology on a panel data sample of manufacturing industries across 15 OECD countries over the period 1980–2005.

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8 citations in Scopus®
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:Growth; financial dependence; fiscal policy; countercyclicality
Language:English
Date:March 2014
Deposited On:03 Feb 2017 11:29
Last Modified:04 Feb 2017 08:49
Publisher:Elsevier
ISSN:0304-3932
Publisher DOI:https://doi.org/10.1016/j.jmoneco.2013.12.003

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