TY - BOOK ID - 84783156 TI - Can Government Demand Stimulate Private Investment? Evidence from U.S. Federal Procurement AU - Hebous, Shafik. AU - Zimmermann, Tom. PY - 2016 SN - 151357938X 1513579843 1513578146 PB - Washington, D.C. : International Monetary Fund, DB - UniCat KW - Investments: General KW - Money and Monetary Policy KW - Public Finance KW - Fiscal Policy KW - Fiscal Policies and Behavior of Economic Agents: General KW - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook: Other KW - National Government Expenditures and Related Policies: General KW - National Government Expenditures and Related Policies: Infrastructures KW - Other Public Investment and Capital Stock KW - Monetary Policy, Central Banking, and the Supply of Money and Credit: General KW - Monetary Systems KW - Standards KW - Regimes KW - Government and the Monetary System KW - Payment Systems KW - Investment KW - Capital KW - Intangible Capital KW - Capacity KW - Public finance & taxation KW - Monetary economics KW - Macroeconomics KW - Expenditure KW - Capital spending KW - Credit ratings KW - Currencies KW - Private investment KW - Money KW - National accounts KW - Expenditures, Public KW - Capital investments KW - Saving and investment KW - United States UR - https://www.unicat.be/uniCat?func=search&query=sysid:84783156 AB - We study the effects of federal purchases on firms’ investment using a novel panel dataset that combines federal procurement contracts in the United States with key financial firm-level information. We find that 1 dollar of federal spending increases firms’ capital investment by 7 to 11 cents. The average effect masks heterogeneity: Effects are stronger for firms that face financing constraints and they are close to 0 for unconstrained firms. In line with the financial accelerator model, our findings indicate that the effect of government purchases works through easing firms’ access to external borrowing. Furthermore, industry-level analysis suggests that that the increase in investment at the firm level translates into an industry-wide effect without crowding-out capital investment of other firms in the same industry. ER -