Preferences of Firms during Economic Crisis: Evidence from Spain

What explains the preferences and actions of firms during the most recent European economic crisis? Surprisingly little data exists to address this question, despite the importance of capital preferences and actions to the resolution of the crisis. This study uses data from a representative sample of firms in a crisis-afflicted state—Spain—to test competing theories about firm preferences and strategies during times of crisis. The results will shed light on the behavior of economic elites during the crisis, attitudes of firms, and probable future actions of firms. The results should have implications for understanding the causes of different policy responses and likely effectiveness of different policies for the worst recession to hit Europe since the Great Depression. We will gather data from 500 Spanish firms in mid October 2013 (stratified by region and sector). We aim to see whether firms that are more dependent on foreign investment, have suffered more during the crisis, or are more export-oriented have differing views of the crisis. In addition, we experimentally test whether endorsements of policies by European Union authorities and different interest groups induce firms to be more favorable or opposed to such policies. Given the paucity of firm-level data gathered and analyzed by social scientists during the Eurozone crisis, are study will be one of the first systematic efforts to understand what these important economic actors think and how those preferences may or may not affect their actions.