IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/21379.html

Monetary Policy and Business Cycles in the Data Economy

Author

Listed:
  • Groh, Carl-Christian
  • Pfäuti, Oliver
  • Saidi, Farzad

Abstract

We study how firms' use of big data shapes the transmission of macroeconomic shocks to investment. Using employer-employee data on job characteristics to measure firm-level data intensity, we show that data-intensive firms respond more strongly to monetary policy shocks. The relationship between data intensity and investment cyclicality is non-linear: it is negative among firms in the lower four quintiles of the data intensity distribution but significantly attenuated among the most data-intensive firms. We develop a theoretical model with endogenous data acquisition to explain these findings. Data raises expected productivity and lowers uncertainty, reducing firms’ investment costs. Because capital and data acquisition are strategic complements, aggregate shocks induce adjustments in data acquisition that amplify investment responses, especially for data-rich firms. Our results imply that changes in firms' access to data — potentially driven by digital markets regulation — can meaningfully affect both the potency of monetary transmission and business cycle fluctuations.

Suggested Citation

  • Groh, Carl-Christian & Pfäuti, Oliver & Saidi, Farzad, 2026. "Monetary Policy and Business Cycles in the Data Economy," CEPR Discussion Papers 21379, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:21379
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP21379
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:21379. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CEPR (email available below). General contact details of provider: https://cepr.org/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.