Fiscal Stimulus Impact on Firms' Profitability During the Global Financial Crisis

Author/Editor:

Carolina Correa-Caro ; Leandro Medina ; Marcos Poplawski-Ribeiro ; Bennett W Sutton

Publication Date:

November 28, 2018

Electronic Access:

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Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary:

Using financial statement data from the Thomson Reuter’s Worldscope database for 22,333 non-financial firms in 52 advanced and emerging economies, this paper examines how fiscal stimulus (i.e., changes in structural deficit) interacted with sectoral business cycle sensitivity affected corporate profitability during the recovery period of the global financial crisis (GFC). Using cross-sectional analyses, our findings indicate that corporate profitability improved significantly after the GFC fiscal stimulus, especially in manufacturing, utilities and retail sectors. Firm size and leverage are also found to be significant in explaining changes in corporate profitability.

Series:

Working Paper No. 18/251

English

Publication Date:

November 28, 2018

ISBN/ISSN:

9781484380659/1018-5941

Stock No:

WPIEA2018251

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

38

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