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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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    Citations

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    Cited by:

    1. Gábor P. Kiss, 2007. "Pain or Gain? Short-term Budgetary Effects of Surprise Inflation - the Case of Hungary," MNB Occasional Papers 2007/61, Magyar Nemzeti Bank (Central Bank of Hungary).
    2. Kátay, Gábor, 2008. "Do firms provide wage insurance against shocks? Evidence from Hungary," Working Paper Series 964, European Central Bank.
    3. Balázs Égert & Ronald MacDonald, 2006. "Monetary Transmission Mechanism in Transition Economies: Surveying the Surveyable," MNB Working Papers 2006/5, Magyar Nemzeti Bank (Central Bank of Hungary).
    4. Ádám Reiff, 2010. "Firm-level adjustment costs and aggregate investment dynamics – Estimation on Hungarian data," MNB Working Papers 2010/2, Magyar Nemzeti Bank (Central Bank of Hungary).
    5. Gábor Békés & Jörn Kleinert & Farid Toubal, 2009. "Spillovers from Multinationals to Heterogeneous Domestic Firms: Evidence from Hungary," The World Economy, Wiley Blackwell, vol. 32(10), pages 1408-1433, October.
    6. Péter Harasztosi, 2011. "Growth in Hungary 1994-2008: The role of capital, labour, productivity and reallocation," MNB Working Papers 2011/12, Magyar Nemzeti Bank (Central Bank of Hungary).
    7. Coricelli, Fabrizio & Égert, Balázs & MacDonald, Ronald, 2006. "Monetary transmission mechanism in Central and Eastern Europe : gliding on a wind of change," BOFIT Discussion Papers 8/2006, Bank of Finland, Institute for Economies in Transition.
    8. Fabrizio Coricelli & Balázs Égert & Ronald MacDonald, 2006. "Monetary Transmission in Central and Eastern Europe: Gliding on a Wind of Change," Focus on European Economic Integration, Oesterreichische Nationalbank (Austrian Central Bank), issue 1, pages 44-87.
    9. Péter Bauer & Marianna Endrész, 2017. "Corporate Investment in Hungary – Stylised Facts on Micro Data," MNB Occasional Papers 2017/131, Magyar Nemzeti Bank (Central Bank of Hungary).
    10. Balazs Vonnak, 2008. "The Hungarian monetary transmission mechanism: an assessment," BIS Papers chapters,in: Bank for International Settlements (ed.), Transmission mechanisms for monetary policy in emerging market economies, volume 35, pages 235-257 Bank for International Settlements.
    11. Szilárd Benk & Zoltán M. Jakab & Gábor Vadas, 2005. "Potential Output Estimations for Hungary: A Survey of Different Approaches," MNB Occasional Papers 2005/43, Magyar Nemzeti Bank (Central Bank of Hungary).
    12. Elek, Péter & Lőrincz, László, 2015. "Az effektív társasági adókulcs rugalmassága Magyarországon a 2009-2011 közötti adókulcscsökkentés alapján
      [The elasticity of the effective corporate tax rate in Hungary: evidence from the tax cut b
      ," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(1), pages 27-47.
    13. Zoltán M. Jakab & Viktor Várpalotai & Balázs Vonnák, 2006. "How does monetary policy affect aggregate demand? A multimodel approach for Hungary," MNB Working Papers 2006/4, Magyar Nemzeti Bank (Central Bank of Hungary).
    14. Gergely Baksay & Balázs Csomós, 2015. "Analysis of the Changes in the Hungarian Tax System and Social Transfers between 2010 and 2014 Using a Behavioural Microsimulation Model," Society and Economy, Akadémiai Kiadó, Hungary, vol. 37(supplemen), pages 29-64, December.
    15. Gábor Kátay & Zoltán Wolf, 2008. "Driving Factors of Growth in Hungary - a Decomposition Exercise," MNB Working Papers 2008/6, Magyar Nemzeti Bank (Central Bank of Hungary).
    16. Fabrizio Coricelli & Bal??zs ??gert & Ronald MacDonald, 2006. "Monetary Transmission Mechanism in Central & Eastern Europe: Gliding on a Wind of Change," William Davidson Institute Working Papers Series wp850, William Davidson Institute at the University of Michigan.
    17. Gianni La Cava, 2005. "Financial Constraints, the User Cost of Capital and Corporate Investment in Australia," RBA Research Discussion Papers rdp2005-12, Reserve Bank of Australia.
    18. Jesús Botero & Andrés Ramírez Hassan & Diana Gutiérrez, 2011. "La transmisión de la política monetaria en Colombia: la inversión," DOCUMENTOS DE TRABAJO CIEF 011107, UNIVERSIDAD EAFIT.

    More about this item

    Keywords

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

    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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