Targeting State Aid: Firm-level Evidence from France

Xun Li and Maryam Vaziri

No 2026/122, IMF Working Papers from International Monetary Fund

Abstract: This paper examines the firm-level impact of state aid in France from 2016–23 and how targeting affects economic outcomes. Using firm-level data and a difference-in-differences approach, we find that aid is most effective for young firms, improving real outcomes while also crowding in private debt financing. Size-based targeting, by contrast, has limited impact. R&D support is particularly effective for young firms in high-tech sectors, and energy aid has the strongest effects in manufacturing, pointing to its potential role in helping firms reduce emissions and facilitating the green transition.

Keywords: Industrial policy; firm performance; state aid (search for similar items in EconPapers)
Pages: 31
Date: 2026-06-12
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