Investment and Monetary Policy in the Euro Area

By Benoît Mojon, Frank Smets, P. Vermeulen. Social Science Research Network, 2002

142 citations recorded by the source corpus.

This paper analyses the effects of a change in monetary policy on firms' investment in Germany, France, Italy and Spain using a data set which provides aggregated balance sheet and profit and loss account data for 17 different industries and 3 different size classes. The main findings are twofold. First, in each of the four countries a change in the user cost of capital, which in turn is affected by interest rates, has both statistically and economically significant effects on investment. Second, while the average interest rate on debt is generally higher for small firms than for large firms, there is little evidence that the effects of monetary policy on small firms are larger JEL Classification: E52

View Paper: https://www.semanticscholar.org/paper/5583deef611225f1dd2f6bcf6f62dd5ac3aa8593

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Citations in the corpus

• New Findings on Firm Investment and Monetary Transmission in the Euro Area (2001, background): “Mojon, Smets and Vermeulen (2001) investigate the elasticity of investment w.r.t its user cost using industry data on the same four countries.”