Demand Shocks and Firm Investment: Micro-Evidence from Fiscal Retrenchment in Italy

• 成果类型: Article
• 署名作者: Coviello, Decio; Marino, Immacolata; Nannicini, Tommaso; Persico, Nicola
• 署名单位: Universite de Montreal; HEC Montreal; University of Naples Federico II; Bocconi University; Northwestern University
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueab073
• 发表日期: 2022
• 页码: 582-617
• 关键词: labor demand; IMPACT

摘要

We study the effect of a persistent demand shock on corporate factor utilisation. Our identification strategy leverages a legislative change designed to permanently reduce spending in certain targeted municipalities. This change generates an arguably exogenous drop in the revenue of procurement firms, which differs depending on each firm's reliance for its revenue on procurement in the targeted municipalities. We find that firms responded to the demand shock by cutting capital rather than labour. We propose a theoretical mechanism based on the irreversibility of capital investment.