2024-03-28T20:25:40Zhttps://uvadoc.uva.es/oai/requestoai:uvadoc.uva.es:10324/479202021-08-19T20:54:13Zcom_10324_1147com_10324_931com_10324_894col_10324_1266
Monetary policy and corporate investment: A panel-data analysis of transmission mechanisms in contexts of high uncertainty
Horra Ruiz, Luis Pablo de la
Perote Peña, Javier
Fuente Herrero, Gabriel de la
Investment decisions
Decisiones de inversión
Interest rates
Tasas de interés
Central banks
Bancos centrales
Panel vector autoregressive
Autorregresión vectorial
Producción Científica
This paper investigates the impact of monetary policy on firm-level investment in contexts of economic turmoil. Using a panel of US public firms for the period 2000–2019, we show that policy-rate-based transmission mechanisms are undermined when uncertainty spikes. Furthermore, we find evidence of the existence of asymmetries at the firm level. In line with real options theory's predictions, firms with higher levels of investment irreversibility, operational inflexibility, and market power, as well as firms with lower cash flows and who operate in low-innovation sectors tend to be less responsive to changes in monetary policy. The effectiveness of monetary policy thus depends on the ability of monetary authorities to reduce uncertainty via expectations-based monetary tools, whilst targeting those sectors more likely to be affected by monetary-policy shifts.
Ministerio de Economía, Industria y Competitividad (grant ECO 2017-84864-P)
Junta de Castilla y León (grant SA049G19)
2021-08-19T10:40:14Z
2021-08-19T10:40:14Z
2021
info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
https://doi.org/10.1016/j.iref.2021.04.035
International Review of Economics & Finance, 2021, vol. 75. p. 609-624
1059-0560
https://uvadoc.uva.es/handle/10324/47920
eng
https://www.sciencedirect.com/science/article/pii/S1059056021001003?via%3Dihub
Atribución 4.0 Internacional
info:eu-repo/semantics/openAccess
http://creativecommons.org/licenses/by/4.0/
© 2021 The Authors
application/pdf
Elsevier