Cyclical fiscal policy, credit constraints, and industry growth

Philippe Aghion, David Hemous and Enisse Kharroubi

No 340, BIS Working Papers from Bank for International Settlements

Abstract: This paper analyzes the impact of cyclical fiscal policy on industry growth. Using Rajan and Zingales' (1998) difference-in-difference methodology on a panel data sample of manufacturing industries across 15 OECD countries over the period 1980-2005, we show that industries with relatively heavier reliance on external finance or lower asset tangibility tend to grow faster (both in terms of value added and of labor productivity growth) in countries which implement more countercyclical fiscal policies.

Keywords: growth; financial dependence; fiscal policy; countercyclicality (search for similar items in EconPapers)
Pages: 58 pages
Date: 2011-02
New Economics Papers: this item is included in nep-eff
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Citations: View citations in EconPapers (14)

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Related works:
Journal Article: Cyclical fiscal policy, credit constraints, and industry growth (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:340

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