Government procurement and access to credit: firm dynamics and aggregate implications
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- dc.contributor.author di Giovanni, Julian
- dc.contributor.author García-Santana, Manuel
- dc.contributor.author Jeenas, Priit
- dc.contributor.author Moral-Benito, Enrique
- dc.contributor.author Pijoan-Mas, Josep
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:44Z
- dc.date.available 2024-11-14T10:09:44Z
- dc.date.issued 2022-02-19
- dc.date.modified 2024-11-14T10:08:26Z
- dc.description.abstract We provide a framework to study how different allocation systems of public procurement contracts affect firm dynamics and long-run macroeconomic outcomes. We start by using a newly created panel dataset of administrative data that merges Spanish credit register loan data, quasicensus firm-level data, and public procurement projects to study firm selection into procurement and the effects of procurement on credit growth and firm growth. We show evidence consistent with the hypotheses that there is selection of large firms into procurement, that procurement contracts provide useful collateral for firms -more so than sales to the private sector- and that procurement contracts facilitate firm growth beyond the contract duration. We next build a model of firm dynamics with both asset-based and earnings-based borrowing constraints and a government that buys goods and services from private sector firms. We use the calibrated model to quantify the long-run macroeconomic consequences of alternative procurement allocation systems. We find that granting procurement contracts to small firms, either by directly targeting them or by slicing large contracts into smaller ones, helps these firms grow and overcome financial constraints in the long run. However, we also find that reducing the average size of contracts -or making it less likely for large firms to access them- removes saving incentives for large firms, whose negative effects on capital accumulation can overcome the expansionary consequences for small firms and hence generate a drop in aggregate output.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1821
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68593
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1821
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword government procurement
- dc.subject.keyword financial frictions
- dc.subject.keyword capital accumulation
- dc.subject.keyword aggregate productivity
- dc.subject.keyword Macroeconomics and International Economics
- dc.title Government procurement and access to credit: firm dynamics and aggregate implications
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper