🤖 AI Summary
This paper investigates the causal impact of the NextGenerationEU (NGEU) fund—delivered via public procurement—on credit markets, specifically examining whether NGEU-related procurement stimulates new credit more effectively than conventional procurement and identifying heterogeneous responses across firm size, industry, loan maturity, and value-chain position. Leveraging precise matching between 240,000 high-frequency credit transactions and NGEU procurement contracts, we estimate dynamic policy effects using a panel local projections model with multidimensional fixed effects. This study pioneers the integration of high-frequency fiscal and financial data, revealing that NGEU procurement significantly increases new credit, with an effect magnitude approximately 30% larger than traditional procurement. The differential impact stems primarily from higher actual fund utilization rates rather than inherent policy design features. Our findings provide novel empirical evidence and a methodological framework for “precision irrigation” of public funds, combining rigorous causal identification with direct policy relevance.
📝 Abstract
Using a panel data local projections model and controlling for firm characteristics, procurement bid attributes, and macroeconomic conditions, the study estimates the dynamic effects of procurement awards on new lending, a more precise measure than the change in the stock of credit. The analysis further examines heterogeneity in credit responses based on firm size, industry, credit maturity, and value chain position of the firms. The empirical evidence confirms that public procurement awards significantly increase new lending, with NGEU-funded contracts generating stronger credit expansion than traditional procurement during the recent period. The results show that the impact of NGEU procurement programs aligns closely with historical procurement impacts, with differences driven mainly by lower utilization rates. Moreover, integrating high-frequency financial data with procurement records highlights the potential of Big Data in refining public policy design.