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The monetary transmission mechanism; evidence from the industries of five OECD countries

Luca Dedola () and Francesco Lippi

No 389, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper presents new evidence on the monetary transmission mechanism based on the effects of unexpected monetary policy shocks on 21 manufacturing industries in 5 OECD countries (France, Germany, Italy, the UK and the US). The goal is twofold. First, to document the crossindustry heterogeneity of monetary policy effects. Second, to explain this heterogeneity in terms of microeconomic characteristics suggested by theory, using an original firmlevel database. The results highlight the following empirical regularities; (i) a significant crossindustry heterogeneity of policy effects; (ii) a similar crossindustry distribution of policy effects across countries. These patterns are systematically related to industry output durability and investmentintensity and to measures of firms' borrowing capacity, size and interest payment burden. Quantitatively, the "credit channel" variables are as significant as the traditional variables (durability, investment intensity) in explaining the differential impact of monetary policy.

Keywords: monetary policy transmission; balance sheet data (search for similar items in EconPapers)
JEL-codes: E52 E32 G32 (search for similar items in EconPapers)
Date: 2000-12
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Related works:
Journal Article: The monetary transmission mechanism: Evidence from the industries of five OECD countries (2005) Downloads
Working Paper: The Monetary Transmission Mechanism: Evidence from the Industries of Five OECD Countries (2000) Downloads
Working Paper: The Monetary Transmission Mechanism: Evidence from the Industry Data of Five OECD Countries (2000) Downloads
Working Paper: The Monetary Transmission Mechanism: Evidence from the Industries of Five OECD Countries (2000)
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