Monetary Policy and Firm-Level Productivity: Financial Frictions, Theory, and Causal Evidence

Karin Klieber (), Michael Sigmund () and Maria Teresa Valderrama ()
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Karin Klieber: Oesterreichische Nationalbank, Monetary Policy
Michael Sigmund: Oesterreichische Nationalbank, Research Section
Maria Teresa Valderrama: Oesterreichische Nationalbank, Economic Analysis Division, http://www.oenb.at

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: We study how monetary policy affects firm-level total factor productivity in the presence of financial frictions using a panel of Austrian non-financial firms. A dynamic firm model and causal empirical framework show that tighter monetary policy reduces productivity-enhancing investment and firm-level TFP. The effects are stronger for highly leveraged firms and are more pronounced for persistent changes in financing conditions than for transitory highfrequency policy surprises.

Keywords: total factor productivity; monetary policy shocks financial frictions (search for similar items in EconPapers)
Pages: 50
Date: 2026-10-07
New Economics Papers: this item is included in nep-cba and nep-sbm
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