Causal Effects of Interest Rate Beliefs on Firm Decisions and Their Aggregate Implications

Alina Kristin Bartscher, Georg Duernecker, Johannes Goensch and Nils Wehrhöfer

No 12442, CESifo Working Paper Series from CESifo

Abstract: This paper studies how firms’ interest rate beliefs affect their borrowing and investment. We exploit a randomized information treatment in a representative firm survey, which informs German firms about the ECB policy rate. Treated firms revise their policy rate expectations downward. Linking the survey to credit register and balance sheet data, we show that treated firms also borrow and invest more, with effects concentrated among smaller firms. Using a heterogeneous-firm model disciplined by our empirical evidence, we show that removing information frictions about interest rates raises aggregate output by 2 percent. Moreover, imperfect information substantially mutes monetary policy transmission.

Keywords: survey experiment; administrative data; firm expectations; imperfect information; investment (search for similar items in EconPapers)
JEL-codes: D25 D83 D84 E22 E52 (search for similar items in EconPapers)
Date: 2026
New Economics Papers: this item is included in nep-eur, nep-exp, nep-fdg and nep-mon
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Working Paper: Causal Effects of Interest Rate Beliefs on Firm Decisions and their Aggregate Implications (2026)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12442

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