Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/149330
Authors: 
de Ridder, Maarten
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 6243
Abstract: 
This paper analyzes the channels through which financial crises exert long-term negative effects on output. Recent models suggest that a shortfall in productivity-enhancing investments temporarily slows technological progress, creating a gap between pre-crisis trend and actual GDP. This hypothesis is tested using a linked lender-borrower dataset on 519 U.S. corporations responsible for 54% of industrial research and development. Exploiting quasi-experimental variation in firm-level exposure to the 2008-9 financial crisis, I show that tight credit reduced investments in productivity-enhancement, and has significantly slowed down output growth between 2010 and 2015. A partial-equilibrium aggregation exercise suggests output would be 12% higher today if productivity-enhancing investments had grown at pre-crisis rates.
Subjects: 
financial crises
endogenous growth
innovation
business cycles
JEL: 
E32
E44
O30
O47
Document Type: 
Working Paper

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