connections. Third, there are fewer constraints to indicate policies that are preferred than policies that are received, which involves clear trade-offs in terms of budget.<sup>11</sup> Our results show that, among firms in low-income countries, tax support is at the same time the most preferred and most commonly received type of support policies (see Table 1 and Table 2).<sup>12</sup> Instead, when analyzing the responses of firms in lower-middle-income countries, there is some alignment with tax deductions and deferrals, but a clear mismatch in the main intervention demanded and offered: access to credit is the most preferred policy, but tax support is the main mechanism of support offered, although only to 6% of businesses.

For upper-middle-income countries there is some alignment for wage subsidies, which at the same time rank high in terms of preferences among the firms but also are very commonly used. However, we identify a mismatch for tax deductions and access to credit, which appear to rank higher in terms of firms’ preferences but low in terms of utilization or access. A similar picture emerges for high-income countries where there is a large mismatch for the demand for tax deferrals and access to these benefits, while there is a better alignment between the preference for wage subsidies and its utilization.

To investigate further the mismatch between the demand for policy and the public support received, we implemented a decomposition exercise to understand what variables have higher explanation power to explain the likelihood for demanding or receiving the support. First, we ran a probit model for each type of policy instrument, including tax support, wage subsidies, payment deferral, and access to credit controlling for size group, sector of activity, shock reported by the firm (e.g. supply, demand, or both), and country fixed effects. We then ran a Shapley decomposition to estimate the relative contribution of each regressor variable, grouped by size, sector, and type of shock. Figure 2 shows the results of this decomposition exercise, which are normalized to 1, excluding the contribution of country fixed effects.<sup>13</sup> The mismatch between the demand for policies and policies received is particularly larger for payment deferrals and access to credit. Overall, the results for received policies are consistent across the different instruments. Most of the variation in the likelihood to receive public support associated with tax, wage subsidies, payment deferral, or access to credit, is explained by variation in size, followed by sector, and shock suffered. These results are also consistent with the fact that larger firms are more likely to receive support related to any of these instruments. A similar pattern is observed for demand for policy associated with tax support or wage subsidies. For both instruments, larger firms are more likely to report them as most needed policy. Yet, an inverted relationship is observed for access to credit and payment deferrals, where variation in the type of shock tends to have higher explanatory power for the demand for those instruments, followed by sector and size. This discrepancy is particularly relevant for access to credit.

> 11In the BPS questionnaire, we asked firms to indicate up to three preferred policies.

> 12In this typology tax support encompasses both, tax exemption or reductions and tax deferrals.

> 13Absolute values of Pseudo R-squared vary by regression. Shapley values do not point the direction of the effect, but rather identify which grouping of variables contribute the most at explaining differences in both, preferences and access to policy.

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