Revisiting the Monetary Transmission Mechanism through an Industry-Level Differential Approach

Sangyup Choi, Tim Willems and Seung Yong Yoo
Additional contact information
Tim Willems: Bank of England
Seung Yong Yoo: Yale University

No 2023rwp-215, Working papers from Yonsei University, Yonsei Economics Research Institute

Abstract: We combine industry-level data on output and prices with monetary policy shock estimates for 105 countries to analyze how the effects of monetary policy vary with industry characteristics. Next to being interesting in their own right, our findings are informative on the importance of various transmission mechanisms, as they are thought to vary systematically with the included characteristics. Results suggest that monetary policy has greater output effects in industries featuring assets that are more difficult to collateralize, consistent with the credit channel, followed by industries producing durables, as predicted by the interest rate channel. The credit channel is stronger during bad times as well as in countries with lower levels of financial development, in line with financial accelerator logic. We do not find support for the cost channel of monetary policy, nor for a channel running via exports. Our database (containing estimated monetary policy shocks for 177 countries) may be of independent interest to researchers.

Keywords: Monetary policy transmission; Industry growth; Financial frictions; Heterogeneity in transmission; Monetary policy shocks. (search for similar items in EconPapers)
JEL-codes: E32 E52 F43 G20 (search for similar items in EconPapers)
Pages: 59pages
Date: 2023-04
New Economics Papers: this item is included in nep-ban, nep-fdg, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Revisiting the monetary transmission mechanism through an industry-level differential approach (2024)
Working Paper: Revisiting the monetary transmission mechanism through an industry‑level differential approach (2023)
Working Paper: Revisiting the Monetary Transmission Mechanism Through an Industry-Level Differential Approach (2022)
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