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Credit Constraints anf Firms' Decisions: Evidence from the COVID-19 Outbreak Italian Firms’ Expectations and Plans

Pierluigi Balduzzi, Emanuele Brancati (), Marco Brianti and Fabio Schiantarelli ()

No 1013, Boston College Working Papers in Economics from Boston College Department of Economics

Abstract: This paper takes advantage of unique survey data on Italian firms to investigate the role played by credit constraints in the transmission of the shocks generated by the COVID-19 outbreak. These data, collected just before and just after the onset of the pandemic, allow us to study how revisions of firms’ expectations and plans are shaped by a survey-based measure of credit constraints that uses information about the outcome of past loan applications. Our results show that the lack of access to credit strongly amplifies the negative effects on planned factor demand and expected sales of the pandemic shock. Moreover, credit-constrained firms, in their search for liquidity, plan to charge significantly higher prices relative to their unconstrained counterparts.

Keywords: COVID-19; firms; credit constraints; expectations; prices; employment; investment; sales prices; employment; investment; sales; orders (search for similar items in EconPapers)
JEL-codes: E2 E3 G30 I10 (search for similar items in EconPapers)
Date: 2020-07-27, Revised 2022-10-07
New Economics Papers: this item is included in nep-eur and nep-mac
Note: Previously circulated as "The Economic Effects of COVID-19 and Credit Constraints: Evidence from Italian Firms’ Expectations and Plans"
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