@article{Huang:294613,
      recid = {294613},
      author = {Huang, Yi and Pagano, Marco and Panizza, Ugo},
      title = {Public debt and private firm funding evidence from Chinese  cities},
      publisher = {The Graduate Institute of International and Development  Studies},
      address = {Geneva. 2016},
      number = {BOOK},
      series = {Graduate Institute of International and Development  Studies Working Paper ; no. 10/2016},
      pages = {67 p. : ill.},
      year = {2016},
      abstract = {In China, local public debt issuance between 2006 and 2013  crowded out investment by private manufacturing firms by  tightening their funding constraints, while it did not  affect state-owned and foreign firms. Using novel data for  local public debt issuance, we establish this result in  three ways. First, local public debt is inversely  correlated with the city-level investment ratio of domestic  private manufacturing firms. Instrumental variable  regressions indicate that this link is causal. Second,  local public debt has a larger negative effect on  investment by private firms in industries more dependent on  external funding. Finally, in cities with high government  debt, firm-level investment is more sensitive to internal  funding, also when this sensitivity is estimated jointly  with the firm's likelihood of being credit-constrained.  Altogether, these results suggest that, by curtailing  private investment, the massive public debt issuance  associated with the post-2008 fiscal stimulus sapped  long-term growth prospects in China.},
      url = {http://repository.graduateinstitute.ch/record/294613},
      doi = {https://doi.org/10.71609/iheid-7f0f-4q91},
}