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Monetary Policy and Corporate Investment in France

Author

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  • Jean-Bernard Chatelain

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique)

  • Andre Tiomo

    (CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - CNRS - Centre National de la Recherche Scientifique)

Abstract

Using a large panel of 6946 French manufacturing firms, this paper investigates the effect of sales, of the cost of capital and of liquidity constraint variables (cash flow or cash stock) on the stock of capital from 1990 to 1999. The user cost elasticity is at the most 0.26 in absolute terms for all the firms of the sample. Three groups of firms representing around 20 per cent of the sample (firms facing a high risk of bankruptcy, firms belonging to the capital goods sector, firms making extensive use of trade credit) are more sensitive to cash flow. Risky firms are less sensitive to sales, when cash stock replaces cash flow. Simulations following shocks of interest rate (related to monetary policy shocks), provides short run contemporaneous elasticities of investment with respect to interest rate through the user cost and through debt repayments taken into account in cash flow.

Suggested Citation

  • Jean-Bernard Chatelain & Andre Tiomo, 2003. "Monetary Policy and Corporate Investment in France," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00112523, HAL.
    • Handle: RePEc:hal:cesptp:halshs-00112523
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00112523v2
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    References listed on IDEAS

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    1. Jean-Bernard Chatelain & Andrea Generale & Ignacio Hernando & Philip Vermeulen & Ulf von Kalckreuth, 2003. "New Findings on Firm Investment and Monetary Policy Transmission in the Euro Area," Post-Print halshs-00119490, HAL.
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    23. Bruno Crépon & Christian Gianella, 2001. "Fiscalité et coût d'usage du capital : incidences sur l'investissement, l'activité et l'emploi," Économie et Statistique, Programme National Persée, vol. 341(1), pages 107-128.
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    Cited by:

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    2. Ignazio Angeloni & Anil K. Kashyap & Benoit Mojon & Daniele Terlizzese, 2003. "Monetary Transmission in the Euro Area: Does the Interest Rate Channel Explain it All?," NBER Working Papers 9984, National Bureau of Economic Research, Inc.
    3. Jesús Botero & Andrés Ramírez Hassan & Diana Gutiérrez, 2011. "La transmisión de la política monetaria en Colombia: la inversión," Documentos de Trabajo de Valor Público 11107, Universidad EAFIT.

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