What are the effects of monetary policy on productivity?

Pierre Guérin

Economics Letters, 2023, vol. 233, issue C

Abstract: We assess the effects of monetary policy shocks on total factor productivity (TFP) using a cross-country panel of firm-level data. We find that monetary policy shocks have a significant effect on TFP: a 100 basis points contractionary monetary policy shock is associated with a 112 percent decline in TFP at a 6-year horizon. The effects of monetary policy shocks on TFP are stronger for financially constrained or vulnerable firms. Further, we find support for a credit channel transmission mechanism of monetary policy on TFP in that intangible investment reacts adversely to contractionary monetary policy shocks.

Keywords: Monetary policy shocks; Financial frictions; Productivity (search for similar items in EconPapers)
JEL-codes: E52 G20 O47 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:233:y:2023:i:c:s0165176523004664

DOI: 10.1016/j.econlet.2023.111440

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