Macroeconomic policy, product market competition, and growth [electronic resource] : the intangible investment channel / prepared by JaeBin Ahn, Romain Duval, and Can Sever.

[Washington, D.C.] : International Monetary Fund, 2020.©2020

Ahn, JaeBin. author.

Duval, Romain. author.

Sever, Can. author.

International Monetary Fund. issuing body.

01-01-2020

1 online resource (26 pages).

text

online resource

IMF working paper ; no. 20/25

IMF working paper ; no. 20/25.

WEB (Copy 1) INTRANET 1254984-1001 ONLINE

Open item 

Economic growth

Monetary policy

Intangible assets

Overseas item

"February 2020"

Includes bibliographical references.

9781513528571

While there is growing evidence of persistent or even permanent output losses from financial crises, the causes remain unclear. One candidate is intangible capital - a rising driver of economic growth that, being non-pledgeable as collateral, is vulnerable to financial frictions. By sheltering intangible investment from financial shocks, counter-cyclical macroeconomic policy could strengthen longer-term growth, particularly so where strong product market competition prevents firms from self-financing their investments through rents. Using a rich cross-country firm-level dataset and exploiting heterogeneity in firm-level exposure to the sharp and unforeseen tightening of credit conditions around September 2008, we find strong support for these theoretical predictions. The quantitative implications are large, highlighting a powerful stabilizing role for macroeconomic policy through the intangible investment channel, and its complementarity with pro-competition product market deregulation.

1254984

1254984-1001

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