Friday Seminar - "Amplifying a Fiscal Stimulus: The Role of Banks" - Ramana Nanda (Imperial College London)
"Amplifying a Fiscal Stimulus: The Role of Banks"
Abstract: Exploiting increases in US defense spending following the 9/11 attacks, we show that the procurement-driven fiscal stimulus led to lower non-performing loans at banks. In turn, constrained banks responded by increasing lending to small businesses in not-directly-impacted counties. We find the additional economic activity enabled by the increased lending capacity is quantitatively important – amplification from this ‘credit multiplier’ is about 10%-15% as large as typical fiscal multipliers estimated in the literature. Since intermediaries are more likely to face constraints in times when a fiscal stimulus is needed, this ’credit multiplier’ can substantially amplify a stimulus’ overall impact in downturns.
related events
Brown Bag Seminar - Mehran Ebrahimian (SHoF/SSE)
Sharpe, SSE main building, entrance via Bertil Ohlins Gata 4 at 12:05
SITE Seminar | Credit contracts, business development and gender: Evidence from Uganda
Room Torsten at SSE at 12:00
Financing the Green Transition: The Role of Private-Public Collaborations
at 16:30