Does Public Debt Crowd Out Corporate Investment? International Evidence
Ugo Panizza and
No 12931, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Using data for advanced and emerging economies, we show that there is a negative correlation between public debt and corporate investment. Industry-level regressions show that high levels of government debt are particularly damaging for industries that need more external financial resources. Firm-level regressions show that government debt increases the sensitivity of corporate investment to cash flow. These results indicate that the relationship between public debt and investment is likely to be causal and that public debt crowds out corporate investment by tightening credit constraints.
Keywords: credit constraints; Crowding out; investment; public debt (search for similar items in EconPapers)
JEL-codes: E22 E62 H63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cfn, nep-mac and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed
Downloads: (external link)
CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at email@example.com
Working Paper: Does Public Debt Crowd Out Corporate Investment? International Evidence (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:12931
Ordering information: This working paper can be ordered from
http://www.cepr.org/ ... rs/dp.php?dpno=12931
Access Statistics for this paper
More papers in CEPR Discussion Papers from C.E.P.R. Discussion Papers Centre for Economic Policy Research, 33 Great Sutton Street, London EC1V 0DX.
Bibliographic data for series maintained by ().