Does Monetary Policy Have Asymmetric Effects? A Look at the Investment Decisions of Italian Firms

By E. Gaiotti, A. Generale. Social Science Research Network, 2001

209 citations recorded by the source corpus.

This paper studies the effects of monetary policy on the investment behaviour of various categories of Italian firms, using a panel from the Company Accounts Data Service (Centrale dei Bilanci). The exercise aims to shed light on the quantitative importance of a channel of transmission operating through balance sheets. Financial variables matter (when defined as either cash flow or the stock of liquidity); small firms and firms which have a larger share of assets that cannot be used as collateral are more affected by monetary policy. In quantitative terms, the difference in the response of investment by different types of firms turns out not to be negligible; however, the implications of this finding for transmission asymmetries across euro-area countries should not be overemphasized. Our main policy conclusion is that monitoring the financial conditions of different types of firms is important in order to assess the overall monetary stance.

Subfields: Accounting, Economics and Econometrics, Finance

View Paper: https://www.semanticscholar.org/paper/362206688b66416c8d640b73127b2368e395fff6

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Citations in the corpus

Monetary policy effects: new evidence from the Italian flow-of-funds (2008, unknown): “Our choice of the nonpolicy variables parallels that of Kim and Roubini (2000), who study the effects of monetary policy innovations on the G7 countries with a SVAR (Structural VAR) model and seem to deal successfully with the empirical puzzles that troubled the literature.”
The Interest Rate and Credit Channels in Belgium: An Investigation with Micro-Level Firm Data (2001, unknown): “First, a series of papers has shown that small firms are likely to be more credit-constrained than large firms (see, for instance, Guiso, 1997, for Italy, Mörttinen, 2000, for inventories in Finland, Vermeulen, 2000, for Germany, France, Italy and Spain, Wesche, 2000, for Austria).”
Winners or Losers? The Effects of Banking Consolidation on Corporate Borrowers (2007, background): “previously estimated accelerator models of investment although it is not strictly an investment function10 (see Fazzari, 1988; Gaiotti and Generale, 2001 for Italian data).”