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Monetary Policy Shifts: How Firms Respond
[Quand la politique monétaire change, les entreprises suivent]

Author

Listed:
  • Djeneba Dramé

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique, UPN - Université Paris Nanterre)

  • Florian Léon

    (FERDI - Fondation pour les Etudes et Recherches sur le Développement International, CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne)

Abstract

In an era of economic uncertainty and escalating geopolitical risks, global growth is slowing while inflationary pressures persist. Policymakers face a delicate trade-off: curbing inflation without stifling recovery—a challenge that is especially acute in developing economies, where traditional tools often fall short. While monetary policy is a cornerstone of economic management, its real-world impact in these countries remains debated. Our recent study (Dramé and Léon, 2025) sheds light on this issue by examining how firms adjust their behavior in response to monetary policy changes. We find that managers do react to both tightening and easing measures—but their responses vary widely, revealing significant heterogeneity.

Suggested Citation

  • Djeneba Dramé & Florian Léon, 2025. "Monetary Policy Shifts: How Firms Respond [Quand la politique monétaire change, les entreprises suivent]," Post-Print hal-05385539, HAL.
    • Handle: RePEc:hal:journl:hal-05385539
    Note: View the original document on HAL open archive server: https://uca.hal.science/hal-05385539v1
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    References listed on IDEAS

    as
    1. Tim Willems, 2020. "What Do Monetary Contractions Do? Evidence From Large Tightenings," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 38, pages 41-58, October.
    2. Bin Grace Li & Christopher Adam & Andrew Berg & Peter Montiel & Stephen O’Connell, 2019. "Structural VARs and the Monetary Transmission Mechanism in Low-Income African Countries," Journal of African Economies, Centre for the Study of African Economies, vol. 28(4), pages 455-478.
    3. Andrew Berg & Luisa Charry & Rafael Portillo & Jan Vlcek, 2019. "The Monetary Transmission Mechanism in the Tropics: A Case Study Approach," Journal of African Economies, Centre for the Study of African Economies, vol. 28(3), pages 225-251.
    Full references (including those not matched with items on IDEAS)

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