Monetary Policy Surprises and Employment: evidence from matched bank-firm loan data on the bank lending-channel

Rodrigo Gonzalez

No 518, Working Papers Series from Central Bank of Brazil, Research Department

Abstract: This paper investigates the effects of the bank lending-channel of monetary policy (MP) surprises on credit supply and employment. To identify the effects of MP surprises, I bring the high-frequency identification strategy of Kuttner (2001) to comprehensive and matched bank-firm data from Brazil. The results are robust and stronger than the ones obtained with Taylor residuals or the reference rate. Consistent with theory, financial intermediaries’ constraints are relevant in the transmission of MP (beyond credit) to the real economy. Firms connected to weaker banks not only observe 0.26 pp higher credit intake, but also employ 0.10 pp more following MP stimulus.

Date: 2020-02
New Economics Papers: this item is included in nep-cba and nep-mon
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Working Paper: Monetary policy surprises and employment: evidence from matched bank-firm loan data on the bank lending-channel (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:bcb:wpaper:518

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