Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
While there is growing evidence of persistent or even permanent output losses from financial crises, the causes remain unclear. One candidate is intangible capital — a rising driver of economic growth that, being nonpledgeable as collateral, is also vulnerable to financial frictions. By sheltering intangible investment from financial shocks, countercyclical macroeconomic policy could strengthen longer-term growth, particularly so where strong product market competition prevents firms from self-financing their investments through rents. Using a rich cross-country firm-level data set and exploiting heterogeneity in firm-level exposure to the sharp and unforeseen tightening of credit conditions around September 2008, we find strong support for these theoretical predictions. The quantitative implications are large, highlighting a powerful stabilizing role for macroeconomic policy through the intangible investment channel, and its complementarity with pro-competitive product market deregulation.