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Liquidity and Firm Response to Fiscal Stimulus

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Abstract

A stimulus programme allowed .rms in Italy to receive a tax credit for R&D expenditure in 2009. We show large heterogeneity in the .rm response. Among .rms that usually smooth R&D through time, the tax credit did not have any effect. Among traditional .rms, the response was mainly dependent on the amount of internal liquidity. Firms with relative large cash holdings raised R&D with respect to 2008 while .rms with low levels of cash did not. The latter mainly used the tax credit to mitigate the negative impact of the credit crunch.

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  • Antonio Acconcia & Claudia Cantabene, 2015. "Liquidity and Firm Response to Fiscal Stimulus," CSEF Working Papers 392, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 16 Feb 2016.
    • Handle: RePEc:sef:csefwp:392
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    Cited by:

    1. Starodubrovskaya Irina & Slavgorodskaya Margarita & Nina Mironova, 2008. "Municipal Reform in 2007: Specifics of Implementation," Research Paper Series, Gaidar Institute for Economic Policy, issue 113P.
    2. Bronwyn H. Hall, 2020. "Tax Policy for Innovation," NBER Chapters, in: Innovation and Public Policy, pages 151-188, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Credit Crisis; Heterogeneity; Liquidity; R&D; Tax Credit.;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing

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