The Effects of Public Spending Composition on Firm Productivity

18 Pages Posted: 23 Aug 2014

See all articles by Richard Kneller

Richard Kneller

University of Nottingham

Florian Misch

ZEW – Leibniz Centre for European Economic Research

Multiple version iconThere are 2 versions of this paper

Date Written: October 2014

Abstract

This paper exploits the unique institutional features of South Africa to estimate the impact of provincial public spending on firm productivity. In contrast to existing microeconomic evidence, we explore the effects of fiscal expenditures and remove the effects of revenue raising policies. Our identification strategy is based on differences in the effects of public spending across firms within the same industry and province. We show that public spending composition affects productivity depending on the capital intensity of firms, with less capital intensive firms being particularly affected. These effects appear to be robust.

JEL Classification: D24, H32, H72

Suggested Citation

Kneller, Richard and Misch, Florian, The Effects of Public Spending Composition on Firm Productivity (October 2014). Economic Inquiry, Vol. 52, Issue 4, pp. 1525-1542, 2014. Available at SSRN: https://ssrn.com/abstract=2485632 or http://dx.doi.org/10.1111/ecin.12092

Richard Kneller (Contact Author)

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Florian Misch

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

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