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Cyclical fiscal policy, credit constraints, and industry growth

  • Philippe Aghion
  • David Hemous
  • Enisse Kharroubi

This paper analyzes the impact of cyclical fiscal policy on industry growth. Using Rajan and Zingales' (1998) difference-in-difference methodology on a panel data sample of manufacturing industries across 15 OECD countries over the period 1980-2005, we show that industries with relatively heavier reliance on external finance or lower asset tangibility tend to grow faster (both in terms of value added and of labor productivity growth) in countries which implement more countercyclical fiscal policies.

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Paper provided by Bank for International Settlements in its series BIS Working Papers with number 340.

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Length: 58 pages
Date of creation: Feb 2011
Date of revision:
Handle: RePEc:bis:biswps:340
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  21. Aghion, Philippe & Askenazy, Philippe & Berman, Nicolas & Cette, Gilbert & Eymard, Laurent, 2012. "Credit Constraints and the Cyclicality of R&D Investment: Evidence from France," Scholarly Articles 12490632, Harvard University Department of Economics.
  22. Javier Andrés & Rafael Doménech & Antonio Fatás, 2007. "The stabilizing role of government size," Banco de Espa�a Working Papers 0710, Banco de Espa�a.
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  24. Ramey, Garey & Ramey, Valerie A, 1995. "Cross-Country Evidence on the Link between Volatility and Growth," American Economic Review, American Economic Association, vol. 85(5), pages 1138-51, December.
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  26. Aghion, Philippe & Marinescu, Ioana, 2007. "Cyclical Budgetary Policy and Economic Growth: What Do We Learn From OECD Panel Data?," Scholarly Articles 3350066, Harvard University Department of Economics.
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  34. Philip R. Lane, 2002. "The Cyclical Behaviour of Fiscal Policy: Evidence from the OECD," Trinity Economics Papers 20022, Trinity College Dublin, Department of Economics.
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  39. repec:ner:tilbur:urn:nbn:nl:ui:12-3125518 is not listed on IDEAS
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