RT info:eu-repo/semantics/article
T1 Monetary policy and corporate investment: A panel-data analysis of transmission mechanisms in contexts of high uncertainty
A1 Horra Ruiz, Luis Pablo de la
A1 Perote Peña, Javier
A1 Fuente Herrero, Gabriel de la
K1 Investment decisions
K1 Decisiones de inversión
K1 Interest rates
K1 Tasas de interés
K1 Central banks
K1 Bancos centrales
K1 Panel vector autoregressive
K1 Autorregresión vectorial
AB 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.
PB Elsevier
SN 1059-0560
YR 2021
FD 2021
LK https://uvadoc.uva.es/handle/10324/47920
UL https://uvadoc.uva.es/handle/10324/47920
LA eng
NO International Review of Economics & Finance, 2021,  vol. 75. p. 609-624
NO Producción Científica
DS UVaDOC
RD 23-nov-2024