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Monetary Policy Shocks and Firms' Investment Decisions

Author

Listed:
  • Klaus Abberger
  • Alexander Rathke
  • Samad Sarferaz
  • Pascal Seiler

Abstract

We study the investment channel of monetary policy through a randomized survey experiment, exposing Swiss firms directly to shocks to the Swiss National Bank's policy rate. Our survey experiment randomizes pure policy-rate shocks - uncontaminated by information effects - and records firms' revisions to investment plans and financing choices. We find pronounced asymmetry: firms respond strongly to unanticipated rate hikes but only moderately to equivalent cuts. This asymmetry varies with firm size, sector, export intensity, and investment types. Investment financing shapes the response: reliance on internal funds and being financially unconstrained amplifies investment sensitivity.

Suggested Citation

  • Klaus Abberger & Alexander Rathke & Samad Sarferaz & Pascal Seiler, 2025. "Monetary Policy Shocks and Firms' Investment Decisions," CESifo Working Paper Series 12099, CESifo.
    • Handle: RePEc:ces:ceswps:_12099
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    References listed on IDEAS

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    1. Christina D. Romer & David H. Romer, 2004. "A New Measure of Monetary Shocks: Derivation and Implications," American Economic Review, American Economic Association, vol. 94(4), pages 1055-1084, September.
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    3. Andreas Dibiasi & Heiner Mikosch & Samad Sarferaz, 2025. "Uncertainty Shocks, Adjustment Costs, and Firm Beliefs: Evidence from a Representative Survey," American Economic Journal: Macroeconomics, American Economic Association, vol. 17(3), pages 36-73, July.
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    7. Heiner Mikosch & Christopher Roth & Samad Sarferaz & Johannes Wohlfart, 2024. "Uncertainty and Information Acquisition: Evidence from Firms and Households," American Economic Journal: Macroeconomics, American Economic Association, vol. 16(2), pages 375-405, April.
    8. Olivier Coibion & Yuriy Gorodnichenko & Michael Weber, 2022. "Monetary Policy Communications and Their Effects on Household Inflation Expectations," Journal of Political Economy, University of Chicago Press, vol. 130(6), pages 1537-1584.
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    Keywords

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    JEL classification:

    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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