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Market Concentration, Macroeconomic Uncertainty and Monetary Policy

Listed author(s):
  • Juan de Dios Tena
  • Francesco Giovannoni

    ()

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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File URL: http://www.efm.bris.ac.uk/economics/working_papers/pdffiles/dp05576.pdf
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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
Handle: RePEc:bri:uobdis:05/576
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