Monetary Policy Shifts: How Firms Respond

Quand la politique monétaire change, les entreprises suivent

Djeneba Dramé and Florian Léon ()
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Djeneba Dramé: EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre
Florian Léon: FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne

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Abstract: In an era of economic uncertainty and escalating geopolitical risks, global growth is slowing while inflationary pressures persist. Policymakers face a delicate trade-off: curbing inflation without stifling recovery—a challenge that is especially acute in developing economies, where traditional tools often fall short. While monetary policy is a cornerstone of economic management, its real-world impact in these countries remains debated. Our recent study (Dramé and Léon, 2025) sheds light on this issue by examining how firms adjust their behavior in response to monetary policy changes. We find that managers do react to both tightening and easing measures—but their responses vary widely, revealing significant heterogeneity.

Keywords: Developing countries; Firms; Financial constraints; Monetary policy; Pays en dévelopement; Firmes; Contraintes financières; Politique monétaire (search for similar items in EconPapers)
Date: 2025-10-14
New Economics Papers: this item is included in nep-cba, nep-inv and nep-mon
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Published in 2025

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