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Government as customer of last resort : the stabilizing effects of government purchases on firms
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Goldman, Jim (2020) Government as customer of last resort : the stabilizing effects of government purchases on firms. The Review of Financial Studies, 33 (2). pp. 610-643. doi:10.1093/rfs/hhz059 ISSN 0893-9454.
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Official URL: http://dx.doi.org/10.1093/rfs/hhz059
Abstract
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.
| Item Type: | Journal Article | ||||||||
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| Subjects: | H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor J Political Science > JF Political institutions (General) |
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| Divisions: | Faculty of Social Sciences > Warwick Business School | ||||||||
| Library of Congress Subject Headings (LCSH): | United States -- Appropriations and expenditures, Government purchasing , Public contracts , Government contractors | ||||||||
| Journal or Publication Title: | The Review of Financial Studies | ||||||||
| Publisher: | Oxford University Press | ||||||||
| ISSN: | 0893-9454 | ||||||||
| Official Date: | February 2020 | ||||||||
| Dates: |
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| Volume: | 33 | ||||||||
| Number: | 2 | ||||||||
| Page Range: | pp. 610-643 | ||||||||
| DOI: | 10.1093/rfs/hhz059 | ||||||||
| Status: | Peer Reviewed | ||||||||
| Publication Status: | Published | ||||||||
| Reuse Statement (publisher, data, author rights): | This is a pre-copyedited, author-produced version of an article accepted for publication in The Review of Financial Studies following peer review. The version of record Jim Goldman, Government as Customer of Last Resort: The Stabilizing Effects of Government Purchases on Firms, The Review of Financial Studies, Volume 33, Issue 2, February 2020, Pages 610–643, is available online at: https://doi.org/10.1093/rfs/hhz059 | ||||||||
| Access rights to Published version: | Restricted or Subscription Access | ||||||||
| Date of first compliant deposit: | 23 September 2022 | ||||||||
| Date of first compliant Open Access: | 23 September 2022 |
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