Does Public Debt Crowd Out Corporate Investment? International Evidence
Ugo Panizza and
Additional contact information
Yi Huang: IHEID, Graduate Institute of International and Development Studies
No 08-2018, IHEID Working Papers from Economics Section, The Graduate Institute of International Studies
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: Investment; Public Debt; Crowding Out; Credit Constraints (search for similar items in EconPapers)
JEL-codes: E22 E62 H63 (search for similar items in EconPapers)
Pages: 35 pages
New Economics Papers: this item is included in nep-cfn, nep-fdg, nep-ifn, nep-mac, nep-pbe and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6) Track citations by RSS feed
Downloads: (external link)
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:gii:giihei:heidwp08-2018
Access Statistics for this paper
More papers in IHEID Working Papers from Economics Section, The Graduate Institute of International Studies Contact information at EDIRC.
Bibliographic data for series maintained by Dorina Dobre ().