Financial Intermediation in Economies with Investment Complementarities
Social Science Research Network
This paper shows how to solve global games applied to macroeconomics and ...nance. We ascertain the roles of public and private information for the determination of a unique equilibrium, and discuss the informative role of market prices. We examine the impact of public information on social welfare, comparing models with and without complementarities at the aggregate level. Abstract This paper provides empirical evidence showing that industries with intense strategic complementarities exhibit
... ntarities exhibit stronger sensitivity to economic shocks. The 2009´s Portuguese credit crunch represents a negative shock for non...nancial ...rms, which has created negative spillover e¤ects among ...rms. Corporate investment declines signi...cantly in industries with strong strategic complementarities following the onset of the crisis, controlling for ...rm ...xed e¤ects, time varying measures of ...nancial constraints and investment opportunities. Consistent with a causal e¤ect, the decline is greatest for ...rms in industries with strong strategic complementarities. To address sample selection concerns we consider several sample splits and apply a matching approach to ...nd the best counterfactual, and con...rm similar results.