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Credit constraints and firms’ decisions: Lessons from the COVID-19 outbreak

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  • Balduzzi, Pierluigi
  • Brancati, Emanuele
  • Brianti, Marco
  • Schiantarelli, Fabio

Abstract

Using novel survey data on Italian firms’ expectations, collected just before and after the beginning of the COVID-19 outbreak, we investigate the role of credit constraints in the transmission of adverse economic shocks. Our results show that credit-constrained firms plan to charge higher prices than unconstrained ones while expecting a larger fall in quantities. When we consider realized outcomes, however, these differences are less pronounced. This evidence is consistent with the credit programs implemented during the crisis being largely unanticipated at its outbreak and benefiting constrained firms relatively more.

Suggested Citation

  • Balduzzi, Pierluigi & Brancati, Emanuele & Brianti, Marco & Schiantarelli, Fabio, 2024. "Credit constraints and firms’ decisions: Lessons from the COVID-19 outbreak," Journal of Monetary Economics, Elsevier, vol. 142(C).
    • Handle: RePEc:eee:moneco:v:142:y:2024:i:c:s030439322300106x
    DOI: 10.1016/j.jmoneco.2023.09.006
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    More about this item

    Keywords

    Firms; Credit constraints; Expectations; Plans; Prices;
    All these keywords.

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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