The interest rate and credit channels in Belgium: An investigation with micro-level firm data

Paul Butzen (), Catherine Fuss and Philip Vermeulen
Additional contact information
Paul Butzen: National Bank of Belgium, Postal: National Bank of Belgium, boulevard de Berlaimont 5, B-1000 Brussels,Belgium

No A3-1, 10th International Conference on Panel Data, Berlin, July 5-6, 2002 from International Conferences on Panel Data

Abstract: This paper investigates the effects of monetary policy on firms' investment behaviour. The analysis relies on a comprehensive database of Belgian firms covering all sectors of economic activity and firms of all sizes. We proceed in two steps. First, we estimate a reduced-form investment equation derived from the neo-classical model, augmented by cash flow. This equation is estimated by the Arellano and Bond (1991) GMM procedure. Second, we compute the elasticity of the user cost of capital and the cash flow/capital ratio to the policy-controlled interest rate. We estimate the model for various sample splits according to sectors and sizes. Our results indicate that small firms are more sensitive to monetary policy than large firms, and that services are almost unaffected. Since the impact differs across sectors and sizes, we can conclude that monetary policy produces distributional effects.

Keywords: Investment; Monetary transmission; Credit channel; Panel data (search for similar items in EconPapers)
JEL-codes: C23 D21 E50 (search for similar items in EconPapers)
Date: 2001-11
New Economics Papers: this item is included in nep-mfd and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://econpapers.repec.org/cpd/2002/7_Fuss.pdf (application/pdf)

Related works:
Journal Article: The interest rate and crédit channels in Belgium: an investigation with micro-level firm data (2002)
Working Paper: The interest rate and credit channel in Belgium: an investigation with micro-level firm data (2001)
Working Paper: The interest rate and credit channels in Belgium: an investigation with micro-level firm data (2001)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cpd:pd2002:a3-1

Access Statistics for this paper

More papers in 10th International Conference on Panel Data, Berlin, July 5-6, 2002 from International Conferences on Panel Data
Bibliographic data for series maintained by Sune Karlsson ().