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Investment Behavior, User Cost and Monetary Policy Transmission - the Case of Hungary

Author

Listed:
  • Gábor Kátay

    (Magyar Nemzeti Bank)

  • Zoltán Wolf

    (Magyar Nemzeti Bank)

Abstract

In this paper we investigate corporate investment behavior using a large panel of Hungarian firms between 1993 and 2002. The standard neoclassifical framework is used to derive empirically feasible specifications, however, several other issues beyond the scope of the framework are also addressed. We draw on the line of research carried out previously in the Eurosystem Monetary Transmission Network (EMTN). Our results are, by and large, similar to those obtained within the EMTN. Namely, the effect of user cost changes on investment is significant and robust across several specifications providing strong evidence against simple sales-accelerator models of investment. Firms' cash-flow proved to be a significant determinant of corporate investment, which suggests that financial variables do matter for firms.

Suggested Citation

  • Gábor Kátay & Zoltán Wolf, 2004. "Investment Behavior, User Cost and Monetary Policy Transmission - the Case of Hungary," MNB Working Papers 2004/12, Magyar Nemzeti Bank (Central Bank of Hungary).
    • Handle: RePEc:mnb:wpaper:2004/12
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    File URL: http://www.mnb.hu/letoltes/wp2004-12.pdf
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    More about this item

    Keywords

    investment; monetary transmission; user cost of capital; credit channel; panel data.;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General

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