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Firm investment and monetary policy transmission in the Euro Area

Jean-Bernard Chatelain (), Andrea Generale, Ignacio Hernando, Ulf von Kalckreuth () and Philip Vermeulen ()
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Andrea Generale: Banca d´Italia - Banca d´Italia

Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) from HAL

Abstract: This paper presents a comparable set of results on the monetary transmission channels on firm investment (the interest rate channel and the broad credit channel) for the four largest euro-areacountries (Germany, France, Italy and Spain), using particularly rich micro datasets for eachcountry containing over 215,000 observations from 1985 to 1999. For each of those countries,investment relationships are estimated explaining investment by its user cost, sales and cash flow.A first result is that investment is sensitive to user cost changes in all those four countries. Thisimplies an operative interest channel in these euro-area countries. A second result is that investmentin all countries is quite sensitive to cash flow movements. However, only in Italy do smaller firmsreact more to cash flow movements than large firms, implying that a broad credit channel might notbe equally pervasive in all countries.

Keywords: Investment; Monetary Transmission Channels; User Cost of Capital (search for similar items in EconPapers)
Date: 2003
Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-00112525
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Published in Angeloni I., Kashyap A., Mojon B. Monetary Policy Transmission in the Euro Area, Cambridge University Press, pp.100-130, 2003

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https://halshs.archives-ouvertes.fr/halshs-00112525/document (application/pdf)

Related works:
Working Paper: Firm Investment and Monetary Policy Transmission in the Euro Area (2002) Downloads
Working Paper: Firm Investment and Monetary Policy Transmission in the Euro Area (2002) Downloads
Working Paper: Firm Investment and Monetary Policy Transmission in the Euro Area (2001) Downloads
Working Paper: Firm Investment and Monetary Policy Transmission in the Euro Area (2001) Downloads
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