TITLE:
Effects of Economic Policy on Firm Performance in Developed and Developing Countries
AUTHORS:
William Geslin Ondaye
KEYWORDS:
International Economy, Economic Policy, Firm Performance
JOURNAL NAME:
Theoretical Economics Letters,
Vol.13 No.1,
February
28,
2023
ABSTRACT: This paper analyzes the effects of economic policy on firm performance in
developed and developing countries, using a sample of firms classified by
turnover. The methodology refers to the estimation of the dynamic panel fixed
effects model. The results show that the priority economic policy tools based
on price, balance of payments and employment control do not influence firm
performance. However, debt increases the performance of firms in Africa. In
high-income countries and China, it is savings and exchange rate policies that
have a positive effect on firm performance. It is recommended that policymakers
in Africa adopt a debt policy based on borrowing in compliance with ceilings
and concessional interest rates so as not to increase debt service and
suffocate the government’s cash flow. In developed countries, the savings
policy must be maintained at the same pace as the mobilization of savings to
meet the needs of growth sectors. Exchange rate policy must be able to absorb
shocks and always adapt to the market.