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Market Concentration, Macroeconomic Uncertainty and Monetary Policy

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  • Juan de Dios Tena
  • Francesco Giovannoni

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Abstract

This paper studies the effect of market structure and macroeconomic uncertainty on the transmission of monetary policy. We motivate our analysis with a simple model which predicts that: 1) investment and production in more concentrated sectors are more affected by demand changes and 2) high uncertainty makes investment and production more sensitive to demand changes. The empirical analysis estimates the effect of monetary shocks on sectoral output for different sectors in the US using different structural vector autoregressive VAR approaches. The results are largely consistent with the proposed theory.

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Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series Bristol Economics Discussion Papers with number 05/576.

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Length: 39 pages
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:bri:uobdis:05/576

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Keywords: Market concentration; macroeconomic uncertainty; monetary policy transmission; vector autoregressive models.;

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Cited by:
  1. J. De Dios Tena & E. Otranto, 2008. "A Realistic Model for Official Interest Rates," Working Paper CRENoS 200802, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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