The effect of monetary policy on firm-level uncertainty

Aeimit Lakdawala and Timothy Moreland

Economics Letters, 2023, vol. 232, issue C

Abstract: Uncertainty at the firm-level falls on FOMC announcement days with substantial variation both across firms and over time. We find that this is not related to commonly used measures of monetary policy shocks which capture surprises about the expected path of the policy rate. Rather it is driven by changes in uncertainty around the expected path of the policy rate. This effect is attenuated for firms that have higher growth opportunities (as measured by Tobin’s Q).

Keywords: Monetary policy transmission; Firm level uncertainty (search for similar items in EconPapers)
JEL-codes: E43 E44 E52 E58 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:232:y:2023:i:c:s0165176523003440

DOI: 10.1016/j.econlet.2023.111319

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