Causal Effects of Interest Rate Beliefs on Firm Decisions and their Aggregate Implications

Alina Bartscher, Georg Duernecker, Johannes Goensch and Wehrhöfer, Nils

No 21123, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: This paper studies how firms' interest rate beliefs affect their borrowing and investment. We exploit a randomized information treatment in a representative firm survey, which informs German firms about the ECB policy rate. Treated firms revise their policy rate expectations downward. Linking the survey to credit register and balance sheet data, we show that treated firms also borrow and invest more, with effects concentrated among smaller firms. Using a heterogeneous-firm model disciplined by our empirical evidence, we show that removing information frictions about interest rates raises aggregate output by 2 percent. Moreover, imperfect information substantially mutes monetary policy transmission.

Keywords: Survey experiment; Administrative data; Firm expectations; Imperfect information; investment (search for similar items in EconPapers)
JEL-codes: D25 D83 D84 E22 E52 (search for similar items in EconPapers)
Date: 2026-02
New Economics Papers: this item is included in nep-eur and nep-exp
References: Add references at CitEc
Citations:

Downloads: (external link)
https://cepr.org/publications/DP21123 (application/pdf)

Related works:
Working Paper: Causal Effects of Interest Rate Beliefs on Firm Decisions and Their Aggregate Implications (2026)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpr:ceprdp:21123

Ordering information: This working paper can be ordered from
https://cepr.org/publications/DP21123

Access Statistics for this paper

More papers in CEPR Discussion Papers from Centre for Economic Policy Research 33 Great Sutton Street, London EC1V 0DX, UK.
Bibliographic data for series maintained by CEPR ().