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Market Concentration, Macroeconomic Uncertainty and Monetary Policy

Juan de Dios Tena () and Francesco Giovannoni

Bristol Economics Discussion Papers from Department of Economics, University of Bristol, UK

Abstract: This paper studies the effect of market structure and macroeconomic uncertainty on the transmission of monetary policy. We motivate our analysis with a simple model which predicts that: 1) investment and production in more concentrated sectors are more affected by demand changes and 2) high uncertainty makes investment and production more sensitive to demand changes. The empirical analysis estimates the effect of monetary shocks on sectoral output for different sectors in the US using different structural vector autoregressive VAR approaches. The results are largely consistent with the proposed theory.

Keywords: Market concentration; macroeconomic uncertainty; monetary policy transmission; vector autoregressive models. (search for similar items in EconPapers)
JEL-codes: E22 E32 E52 D43 (search for similar items in EconPapers)
Pages: 39 pages
Date: 2005-08
New Economics Papers: this item is included in nep-cba, nep-com, nep-fmk, nep-mac and nep-mon
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Journal Article: Market concentration, macroeconomic uncertainty and monetary policy (2008) Downloads
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