Sep 2026· Federal Reserve Bank of Boston Research Department Working Papers· 0 citations· 29 references
Abstract
: We show that interactions across government policies affect firms’ cost of equity capital. Exploiting the 2018 – 2019 U.S. tariff shocks and concurrent federal procurement spending, we find that firms facing higher tariff exposure earn higher subsequent risk premia, but this effect is substantially attenuated for firms receiving greater procurement. A one-standard-deviation increase in procurement attenuates about two-thirds of the tariff-related risk premium. Procurement is relatively more favorable for politically connected and economically vulnerable firms. Larger procurement inflows also attenuate tariff-induced declines in subsequent earnings. Together, these findings reveal a form of fiscal insurance in which government procurement partially offsets the financing and real consequences of tariff exposure.
Fiscal stance and sovereign credibility shape monetary policy transmission even outside fiscal dominance. Using a panel of advanced and emerging economies since the mid-1990s, we show that sovereign-risk regimes differ less by headline debt than by borrowing costs, debt composition, and interest burdens. Elevated sover...
Mauricio Villamizar-Villegas, O. M. Valencia-Arana, Andrés Felipe Prado et al.· 0 citations
This study examines how macroeconomic variables—the market risk premium, inflation, the exchange rate, and the interest rate—affect the performance of portfolios that are constructed using six different construction strategies. We use monthly data of 31 non-financial stocks listed on the Egyptian Exchange over the peri...
Shahd Elboghdady, Marwan Amr, Emmanuel Allieu et al.· Journal of International Fin...· 0 citations
We develop a model of the joint behavior of optimal tax rates and government spending over the business cycle to explain procyclical fiscal policy in emerging markets. Our setup relies on financial frictions, which have been shown to be critical features of emerging markets, captured by various degrees of asset market...
Andrés Fernández, Daniel Guzmán-Girón, Ruy Lama et al.· American Economic Journal: M...· 0 citations
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