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Quantitative easing and corporate innovation

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  • Grimm, Niklas
  • Laeven, Luc
  • Popov, Alexander

Abstract

To what extent can Quantitative Easing impact productivity growth? We document a strong and heterogeneous response of corporate R&D investment to changes in debt financing conditions induced by corporate debt purchases under the ECB’s Corporate Sector Purchase Program. Companies eligible for the program increase significantly their investment in R&D, relative to similar ineligible companies operating in the same country and sector. The evidence further suggests that by subsidizing the cost of debt, corporate bond purchases by the central bank stimulate innovation through a wealth transfer to innovative companies with low debt levels, rather than by supporting credit constrained firms. JEL Classification: E5, G10, O3

Suggested Citation

  • Grimm, Niklas & Laeven, Luc & Popov, Alexander, 2021. "Quantitative easing and corporate innovation," Working Paper Series 2615, European Central Bank.
    • Handle: RePEc:ecb:ecbwps:20212615
    Note: 261593
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    2. repec:ecb:ecbdps:202219 is not listed on IDEAS

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    More about this item

    Keywords

    corporate innovation; productivity growth; quantitative easing; unconventional monetary policy;
    All these keywords.

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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