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EMU, Monetary Policy and the Role of Financial Constraints

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Author Info
Cobham, Alex () (Finance and Trade Policy Research Centre, Queen Elizabeth House, University of Oxford)

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Abstract

This paper presents some preliminary findings on the impact of a single European monetary policy on industrial performance. Literature on the potential for differential monetary policy impact to drive asymmetric responses across the Union is surveyed, and the importance of the credit channel of policy is identified. The key role of financial constraints on firms is noted. A different treatment of the constraint is then suggested, and shown through modelling to be consistent with the stylised facts of firm size. An econometric approach based on this model is then outlined as the basis for future research.

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Paper provided by United Nations University, Institute for New Technologies in its series EIFC - Technology and Finance Working Papers with number 6.

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Date of creation: 2001
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Handle: RePEc:dgr:unutaf:eifc01-6

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Keywords: Monetary Policy Industrial Performance Europe

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    Other versions:
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  5. Cobham, David & Cosci, Stefania & Mattesini, Fabrizio, 1999. "The Italian Financial System: Neither Bank Based nor Market Based," Manchester School, University of Manchester, vol. 67(3), pages 325-45, June. [Downloadable!] (restricted)
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  20. Greenwald, Bruce & Stiglitz, Joseph E & Weiss, Andrew, 1984. "Informational Imperfections in the Capital Market and Macroeconomic Fluctuations," American Economic Review, American Economic Association, vol. 74(2), pages 194-99, May. [Downloadable!] (restricted)
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  21. Saltari, Enrico & Travaglini, Giuseppe, 2001. "Financial Constraints and Investment Decisions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 48(3), pages 330-44, August. [Downloadable!] (restricted)
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  27. Cabral, Luis, 1995. "Sunk Costs, Firm Size and Firm Growth," Journal of Industrial Economics, Blackwell Publishing, vol. 43(2), pages 161-72, June. [Downloadable!] (restricted)
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  31. Kashyap, Anil K. & Stein, Jeremy C., 1995. "The impact of monetary policy on bank balance sheets," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 42, pages 151-195, June. [Downloadable!] (restricted)
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  32. Kadapakkam, Palani-Rajan & Kumar, P. C. & Riddick, Leigh A., 1998. "The impact of cash flows and firm size on investment: The international evidence," Journal of Banking & Finance, Elsevier, vol. 22(3), pages 293-320, March. [Downloadable!] (restricted)
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  34. Cobham, David & Serre, Jean-Marin, 2000. "A Characterization of the French Financial System," Manchester School, University of Manchester, vol. 68(1), pages 44-67, January. [Downloadable!] (restricted)
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  1. Cobham, Alex, 2004. "Investment Finance and Monetary Policy in Europe," EIFC - Technology and Finance Working Papers 39, United Nations University, Institute for New Technologies. [Downloadable!]
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