Monetary Transmission to Firm-level R&D

Ruslana Datsenko and Martin Blomhoff Holm

No 21852, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Monetary policy is usually evaluated through its effect on aggregate output and inflation, with less attention to how it reallocates innovative investment across firms. Existing evidence shows that higher rates reduce innovation, but the firms driving this response remain unclear. Combining Norway’s R&D survey with administrative data and narrative monetary shocks for 2001–2018, we estimate heterogeneous firm responses. Contractionary policy reduces R&D most in high-growth firms with recent equity issuance, consistent with asset-price channels of monetary transmission. Standard debt-based measures explain little heterogeneity. Monetary policy therefore has long-run real effects primarily through its effects on R&D in high-growth firms.

Keywords: Monetary policy; Innovation; Research and development (search for similar items in EconPapers)
JEL-codes: E52 O31 (search for similar items in EconPapers)
Date: 2026-08
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