https://macropaperwarehouse.com/authors/ricardo-duque-gabriel/Ricardo Duque GabrielHugo -- gohugo.ioen-usMon, 01 Jan 2024 00:00:00 +0000https://macropaperwarehouse.com/papers/the-credit-channel-of-public-procurement/Mon, 01 Jan 2024 00:00:00 +0000https://macropaperwarehouse.com/papers/the-credit-channel-of-public-procurement/<p><strong>Research question and motivation.</strong> Public procurement accounts for roughly one-third of government spending (12.6% of GDP and 30% of total government expenditures in OECD countries in 2019). The standard view is that procurement helps firms grow by raising their <em>revenues</em>. Gabriel asks whether procurement also operates through a previously underexplored <em>credit</em> channel: if a procurement contract is a secure future cash-flow stream, firms can pledge it as collateral to obtain more credit. This matters especially in bank-dependent economies (in Portugal and several OECD countries, &gt;80% of nonfinancial corporate debt is bank loans; &lt;1% of Portuguese firms access capital markets), and for small/financially constrained firms.</p>