Government as Customer of Last Resort: The Stabilizing Effects of Government Purchases on Firms

• 成果类型: Article
• 署名作者: Goldman, Jim
• 署名单位: University of Toronto
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhz059
• 发表日期: 2020
• 页码: 610
• 关键词: production networks; american recovery; agglomeration; shocks; size

摘要

I document a beneficial effect of the government's participation in product markets. Exploiting the 2008-2009 financial crisis as a natural experiment, I show that federal procurement contracts insulated government contractors' performance from the crisis. By 2009, government contractors had 15% higher market capitalization, had 18% higher capital expenditures, and received 26% more bank credit than did similar firms. This stabilizing effect, in turn, spilled over into neighboring firms. An average amount of government purchases reduced local employment losses by 35% in retail industries and by 48% in industries supplying government contractors. Spillovers were particularly strong in high economic slack areas.