01950cas a2200253 a 4500 AALejournalIMF016692 230101c9999 xx r poo 0 0eng d 5.00 USD 9781513578729 1018-5941 BD-DhAAL BD-DhAAL Hebous, Shafik. Can Government Demand Stimulate Private Investment? : Evidence from U.S. Federal Procurement / Shafik Hebous, Tom Zimmermann. Washington, D.C. : International Monetary Fund, 2016. 1 online resource (33 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students We study the effects of federal purchases on firms' investment using a novel panel dataset that combines federal procurement contracts in the United States with key financial firm-level information. We find that 1 dollar of federal spending increases firms' capital investment by 7 to 11 cents. The average effect masks heterogeneity: Effects are stronger for firms that face financing constraints and they are close to 0 for unconstrained firms. In line with the financial accelerator model, our findings indicate that the effect of government purchases works through easing firms' access to external borrowing. Furthermore, industry-level analysis suggests that that the increase in investment at the firm level translates into an industry-wide effect without crowding-out capital investment of other firms in the same industry. Mode of access: Internet Zimmermann, Tom. IMF Working Papers; Working Paper ; No. 2016/060 Full text available on IMF http://elibrary.imf.org/view/journals/001/2016/060/001.2016.issue-060-en.xml IMF e-Library