scholarly journals Financial Constraints and the Response of Business Investment to Monetary Policy Shocks

2016 ◽  
Vol 5 (3) ◽  
pp. 31-46 ◽  
Author(s):  
Timothy J. Haase
Keyword(s):  
Monetary Policy ◽  
Financial Constraints ◽  
Previous Literature ◽  
Continuous Series ◽  
Monetary Policy Shocks ◽  
Fixed Investment ◽  
Business Investment ◽  
Policy Shocks ◽  
Liquid Portion ◽  
Asset Size

Abstract In this study I investigate what impact monetary policy shocks have on firms’ fixed investment, the less liquid portion of gross investment that requires more planning. I account for firms facing financial constraints firms by utilizing a common measure of asset size, which is used in previous literature. I use two exogenous, continuous series of monetary policy shocks to show that constrained firms have statistically different responses to policy than unconstrained firms. Specifically, I find that constrained firms’ fixed investment significantly responds more to monetary policy shocks than unconstrained firms.

scholarly journals Monetary Policy Shocks, Financial Constraints and Firm-Level Equity Return: Panel Evidence

2013 ◽  
Vol 39 ◽  
pp. 51-63
Author(s):  
Zulkefly Abdul Karim ◽  
Mohd. Azlan Shah Zaidi ◽  
Bakri Abdul Karim
Keyword(s):  
Monetary Policy ◽  
Financial Constraints ◽  
Monetary Policy Shocks ◽  
Firm Level ◽  
Policy Shocks

scholarly journals Pushing on a String: US Monetary Policy Is Less Powerful in Recessions

2016 ◽  
Vol 8 (4) ◽  
pp. 43-74 ◽  
Author(s):  
Silvana Tenreyro ◽  
Gregory Thwaites
Keyword(s):  
Monetary Policy ◽  
Fiscal Policy ◽  
Business Cycle ◽  
Resource Utilization ◽  
Monetary Policy Shocks ◽  
Business Investment ◽  
Us Economy ◽  
The Us ◽  
Policy Shocks ◽  
The Business Cycle

We investigate how the response of the US economy to monetary policy shocks depends on the state of the business cycle. The effects of monetary policy are less powerful in recessions, especially for durables expenditure and business investment. The asymmetry relates to how fast the economy is growing, rather than to the level of resource utilization. There is some evidence that fiscal policy has counteracted monetary policy in recessions but reinforced it in booms. We also find evidence that contractionary policy shocks are more powerful than expansionary shocks, but contractionary shocks have not been more common in booms. So this asymmetry cannot explain our main finding. (JEL E21, E22, E32, E52)

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