 Productivity responses of high-tech firms to monetary policyM. Jahangir Alam The North American Journal of Economics and Finance, 2025, vol. 80, issue C Abstract: This paper examines the effect of monetary policy shocks on the Total Factor Productivity (TFP) of high-tech versus low-tech firms, focusing on how changes in borrowing costs and credit availability influence productivity. To isolate the causal effect, I use firm-level longitudinal data from Compustat’s publicly listed firms and apply the Local Projections-Instrumental Variables (LP-IV) approach, with high-frequency interest rate surprises serving as instrumental variables. The results indicate that smaller, younger, and low-cash-holding high-tech firms are more vulnerable to contractionary monetary policy shocks. Specifically, a one-percentage-point increase in the 2-year treasury rate results in approximately a 0.5 percent decline in TFP for high-tech firms, with the negative effect becoming more pronounced when firms face financing constraints. Given that interest rate hikes are particularly harmful to high-tech firms, I recommend financial support to mitigate the adverse effects of contractionary monetary policy on these firms. Keywords: Monetary policy; Productivity; High-tech firms; LP-IV (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:80:y:2025:i:c:s1062940825001597 DOI: 10.1016/j.najef.2025.102519 Access Statistics for this article The North American Journal of Economics and Finance is currently edited by Hamid Beladi More articles in The North American Journal of Economics and Finance from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.