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Does monetary policy have asymmetric effects? A look at the investment decisions of Italian firms

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Author Info
Eugenio Gaiotti (Banca d'Italia, Via Nazionale 91, 00184 Rome, Italy.)
Andrea Generale (Banca d'Italia, Via Nazionale 91, 00184 Rome, Italy.)

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Abstract

This paper studies the effects of monetary policy on the investment behaviour of various categories of Italian firms, using a panel from the Company Accounts Data Service (Centrale dei Bilanci). The exercise aims to shed light on the quantitative importance of a channel of transmission operating through balance sheets. Financial variables matter (when defined as either cash flow or the stock of liquidity); small firms and firms which have a larger share of assets that cannot be used as collateral are more affected by monetary policy. In quantitative terms, the difference in the response of investment by different types of firms turns out not to be negligible; however, the implications of this finding for transmission asymmetries across euro-area countries should not be overemphasized. Our main policy conclusion is that monitoring the financial conditions of different types of firms is important in order to assess the overall monetary stance. JEL Classification: E22; E50.

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Paper provided by European Central Bank in its series Working Paper Series with number 110.

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Length: 58 pages
Date of creation: Dec 2001
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Handle: RePEc:ecb:ecbwps:20010110

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Related research
Keywords: Investment; monetary transmission; user cost of capital.;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Jean-Bernard Chatelain & Andrea Generale & Ignacio Hernando & Philip Vermeulen & Ulf von Kalckreuth, 2001. "Firm investment and monetary policy transmission in the Euro area," Working Paper Series 112, European Central Bank. [Downloadable!]
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  2. Jean-Bernard Chatelain, 2001. "Investment, the cost of capital, and monetary policy in the nineties in France: a panel data investigation," Working Paper Series 106, European Central Bank. [Downloadable!]
    Other versions:
  3. J. B. Chatelain & Andrea Generale & I. Hernando & U. von Kalckreuth & P. Vermeulen, 2001. "Firm investment and monetary transmission in the euro area," Temi di discussione (Economic working papers) 431, Bank of Italy, Economic Research Department. [Downloadable!]
  4. Paul Butzen & Catherine Fuss & Philip Vermeulen, 2001. "The interest rate and credit channels in Belgium: an investigation with micro-level firm data," Research series 2001-12, National Bank of Belgium. [Downloadable!]
    Other versions:
  5. Jean-Bernard Chatelain & Andrea Generale & Ignacio Hernando & Ulf Von Kalckreuth & Philip Vermeulen, 2003. "Firm Investment And Monetary Policytransmission In The Euro Area," Post-Print halshs-00112525_v1, HAL. [Downloadable!]
  6. Eugenio Gaiotti & Andrea Generale, 2001. "Does monetary policy have asymmetric effects? A look at the investment decisions of Italian firms," Working Paper Series 110, European Central Bank. [Downloadable!]
    Other versions:
  7. Riccardo Bonci & Francesco Columba, 2007. "The Effects Of Monetary Policy Shocks On Flow Of Funds:The Italian Case," Money Macro and Finance (MMF) Research Group Conference 2006 75, Money Macro and Finance Research Group. [Downloadable!]
  8. Alberto Jaramillo & Hermilson Velásquez & Javier Santiago Ortiz & Natalia Serna, 2003. "Aspectos teóricos y empíricos de la relación empresas bancos," Grupo de estudios en economía y empresa 003922, EAFIT-GRUPO DE ESTUDIOS EN ECONOMIA Y EMPRESA (GEE). [Downloadable!]
  9. Filippo Altissimo & Eugenio Gaiotti & Alberto Locarno, 2002. "Is money informative? Evidence form a large model used for policy analysis," Temi di discussione (Economic working papers) 445, Bank of Italy, Economic Research Department. [Downloadable!]
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  10. Jean-Bernard Chatelain & Andre Tiomo, 2002. "Investment and the Cost of Capital in the Ninetiesin France: A Panel Data Investigation," Post-Print halshs-00112540_v1, HAL. [Downloadable!]
  11. Ignazio Angeloni & Benoit Mojon & Anil K. Kashyap & Daniele Terlizzese, 2002. "Monetary transmission in the Euro Area: where do we stand?," Working Paper Series 114, European Central Bank. [Downloadable!]
  12. Andreas Worms, 2001. "The reaction of bank lending to monetary policy measures in Germany," Working Paper Series 096, European Central Bank. [Downloadable!]
  13. Mayes , David G. & Virén , Matti, 2004. "Asymmetries in the Euro area economy," Research Discussion Papers 9/2004, Bank of Finland. [Downloadable!]
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  14. Ignacio Hernando & André Tiomo, 2002. "Financial constraints and investment in France and Spain: a comparison using firm level data," Banco de España Working Papers 0214, Banco de España. [Downloadable!]
  15. Paolo Angelini, 2002. "Liquidity and Announcement Effects in the Euro Area," Temi di discussione (Economic working papers) 451, Bank of Italy, Economic Research Department. [Downloadable!]
    Other versions:
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