Author
Listed:
- Herrera Dappe, Matías
- Musacchio, Aldo
- Turkgulu, Burak
- Pan, Carolina
- Barboza, Jonathan
- Semikolenova, Yadviga
Abstract
This paper examines the effects of a negative macroeconomic shock on the financial performance of state-owned enterprises (SOEs) in infrastructure. The main aim of the paper is to explore whether SOEs serve as countercyclical instruments or whether they end up generating fiscal costs during a downturn, perhaps amplifying negative shocks. The paper introduces a new measure of fiscal injections that includes subsidies, equityrecapitalizations, and loans from the government, other SOEs, or state-owned financial institutions. The empirical setup uses a quasi-experimental setting that exploits the differential effects of a drastic fall in oil prices (in 2014–15) for SOEs in countries that experience a negative aggregate demand drop as a consequence of this shock versus similar firms in countries that do not suffer a downturn from the shock. The results—based on a balanced sample using coarsened exact matching and a differences-in-differences estimation—show that SOEs in treatment countries received increases in fiscal injections as a percent of average assets of 3.5 percent the year after the shock, equivalent to a significant recapitalization. These fiscal injectionstake the form of equity injections and loans from the government and state-owned financial enterprises. The results also show that capital expenditure as a percent of average assets in fully owned infrastructure SOEs decreased by 3.5 percentage points the year after the negative shock, equivalent to a 40 percent decline relative to its average level. In sum, this paper presents evidence that shows that SOEs do not serve as countercyclical tools and, in fact, may amplify negative shocks by requiring fiscal injections for SOEs while also lowering their capital expenditures.
Suggested Citation
Herrera Dappe, Matías & Musacchio, Aldo & Turkgulu, Burak & Pan, Carolina & Barboza, Jonathan & Semikolenova, Yadviga, 2024.
"State-owned enterprises as countercyclical instruments: Quasi-experimental evidence from the infrastructure sector,"
World Development, Elsevier, vol. 179(C).
Handle:
RePEc:eee:wdevel:v:179:y:2024:i:c:s0305750x24000780
DOI: 10.1016/j.worlddev.2024.106608
Download full text from publisher
As the access to this document is restricted, you may want to search for a different version of it.
Corrections
All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:wdevel:v:179:y:2024:i:c:s0305750x24000780. See general information about how to correct material in RePEc.
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
We have no bibliographic references for this item. You can help adding them by using this form .
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/worlddev .
Please note that corrections may take a couple of weeks to filter through
the various RePEc services.