1 option
Financial Heterogeneity and the Investment Channel of Monetary Policy / Pablo Ottonello, Thomas Winberry.
- Format:
- Book
- Author/Creator:
- Ottonello, Pablo.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w24221.
- NBER working paper series no. w24221
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2018.
- Summary:
- We study the role of financial frictions and firm heterogeneity in determining the investment channel of monetary policy. Empirically, we find that firms with low default risk - those with low debt burdens and high "distance to default" - are the most responsive to monetary shocks. We interpret these findings using a heterogeneous firm New Keynesian model with default risk. In our model, low-risk firms are more responsive to monetary shocks because they face a flatter marginal cost curve for financing investment. The aggregate effect of monetary policy may therefore depend on the distribution of default risk, which varies over time.
- Notes:
- Print version record
- January 2018.
The Penn Libraries is committed to describing library materials using current, accurate, and responsible language. If you discover outdated or inaccurate language, please fill out this feedback form to report it and suggest alternative language.