Essays on macroeconomics and financial restrictions

Resumen

Access to credit during crises is essential for both private and public institutions. For private firms, access to credit can contribute to keep employment and investment despite lower sales. For public institutions, better access to credit can balance public budgets when tax revenues decrease. But access to credit is not unlimited; it is subject to financial constraints. With this thesis I seek to study how financial constraints affect macroeconomic dynamics. In chapter 1, I analyze whether the financial structure of small and young firms had a negative effect on their employment and investment decisions during the last crisis. In order to answer that question I follow two steps. First I describe in detail the particular financial structure of small and young firms during the period 1991-2012, using a rich panel data on Spanish manufacturing firms. I document stylized facts about financial patterns of Spanish firms comparing firms of different sizes and cohorts. One of the main results is that smaller and younger firms arrived at the onset of the crisis with more total leverage and more bank dependency. Another key finding is that smaller and younger firms experienced a deleverage process during the last crisis, since they could not easily substitute bank leverage by other leverage. Secondly, I assess the real effect of these particular financial features of small and young firms. I propose two regressions to compute the effect of bank leverage and deleveraging on job destruction and investment during the crisis. The main findings are that bigger bank leverage and deleveraging had a negative real effect only on small firms. Chapter 2 is motivated by two empirical facts uncovered in chapter 1. Firstly, from 2008 to 2012 bigger firms kept total amount of debt constant while smaller firms decreased it. Secondly, bigger firms managed to keep total debt constant by better interchanging bank debt and non-bank debt. I undercover these two facts using a rich panel data on Spanish manufacturing firms. In this paper I provide a quantitative macroeconomic framework in line with this evidence. In my model, manufacturing firms have access to two different types of debt: collateralized debt and uncollateralized debt. Collateralized debt represents bank debt, it is obtained from a financial intermediary and requires durable input as collateral. Uncollateralized debt represents trade debt and it is obtained from suppliers when obtaining non-durable inputs. Size matters since bigger firms can provide more collateral. Firm size also matters when manufacturing firms and suppliers engage in a Nash bargaining game in order to price trade debt. I find that firms' ability to interchange alternative kinds of debt is relevant for firm growth and dividend smoothing. In addition, I show that improving trade debt conditions for smaller firms is crucial, since trade debt could have been a source of extra liquidity during crisis. In chapter 3 I analyze the aggregate effects of governments' delayed payments. During the 2008 recession, some European governments have relied in delaying payments to their suppliers as a way of equilibrating public balances. In Spain, Portugal, Italy and Greece, public late payments are three times higher than the EU average. Which are the aggregate consequences of these governments' late payments? There is a trade-off. On the one hand, by delaying payments to its suppliers, governments can access an additional way of funding public expenses and equilibrating its budget constraint. On the other hand, delaying payments to suppliers could have a negative effect on suppliers' production and employment decisions. In this paper I present a novel DSGE model in which the government can finance itself through delayed payments. The model shows that if the government's supplier has low wealth and/or the government owes high payments, then delaying more payments creates a distortion in the economy. I simulate the model in line with Spain's fiscal shocks from 2008 to 2012, and I analyze the aggregate consequences of using public delayed payments as a fiscal tool instead of other fiscal policies.