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Policy Support and Firm Performance During the COVID-19 Pandemic: Evidence from Colombia

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  • Galindo, Arturo
  • Tovar, Jorge

Abstract

The pandemic hit the Colombian economy as hard as other countries. Using a novel Business Pulse Survey, this paper tests the effect of government support and COVID-19 cases on firms performance. A one-standard-deviation increase in government support (in periods in which the pandemics intensity was average) increased the percentage of firms reporting normal operations by 4.8 percent. Political demonstrations in spring 2021, however, reduced the percentage by 13 percent each month they lasted. Firms' financial distress also counters the impact of government support, suggesting the need to ease firms' access to financial markets. Last, we show that investing in digital solutions improved firms' performance but remote work degraded it.

Suggested Citation

  • Galindo, Arturo & Tovar, Jorge, 2022. "Policy Support and Firm Performance During the COVID-19 Pandemic: Evidence from Colombia," IDB Publications (Working Papers) 12591, Inter-American Development Bank.
    • Handle: RePEc:idb:brikps:12591
    DOI: http://dx.doi.org/10.18235/0004622
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    Keywords

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General

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