AUT LibraryAUT
View Item 
  •   Open Research
  • AUT Faculties
  • Faculty of Business, Economics and Law
  • AUT School of Economics
  • View Item
  •   Open Research
  • AUT Faculties
  • Faculty of Business, Economics and Law
  • AUT School of Economics
  • View Item
JavaScript is disabled for your browser. Some features of this site may not work without it.

Monetary Policy, Investment and Firm Heterogeneity

Vermeulen, P; Durante, E; Ferrando, A
Thumbnail
View/Open
Journal article (1.693Mb)
Permanent link
http://hdl.handle.net/10292/15436
Metadata
Show full metadata
Abstract
This paper provides new evidence on the channels of monetary policy transmission combining 9 million observations on firm level investment and high-frequency identified monetary policy shocks. We show that the reaction of firms’ investment to a monetary policy shock is heterogeneous along dimensions that correspond to the two main channels of monetary policy transmission. First, we show that young firms are more sensitive to monetary policy shocks and that high leverage amplifies the effects, supporting the existence of a credit channel of monetary policy. Second, we document large cross-sectional heterogeneity related to the industry the firm operates in. We find that firms producing durable goods react more than others, which is consistent with traditional interest rate channel effects of monetary policy. Furthermore, this sectoral effect is longer lived. In line with the demand effects of the interest rate channel, we also provide evidence that sales growth of durables producing firms reacts stronger to a monetary policy shock.
Keywords
Monetary policy transmission; Monetary policy shocks; Investment
Date
September 1, 2022
Source
European Economic Review, Volume 148, September 2022, 104251
Item Type
Journal Article
Publisher
Elsevier
DOI
10.1016/j.euroecorev.2022.104251
Publisher's Version
https://www.sciencedirect.com/science/article/pii/S0014292122001489
Rights Statement
© 2022 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

Contact Us
  • Admin

Hosted by Tuwhera, an initiative of the Auckland University of Technology Library

 

 

Browse

Open ResearchTitlesAuthorsDateAUT School of EconomicsTitlesAuthorsDate

Alternative metrics

 

Statistics

For this itemFor all Open Research

Share

 
Follow @AUT_SC

Contact Us
  • Admin

Hosted by Tuwhera, an initiative of the Auckland University of Technology Library