SED 2024

Abstract

We investigate monetary policy transmission to investment using Norwegian administrative data. We have two main findings. First, financially constrained firms respond more. The effect, however, is modest, suggesting that firm heterogeneity plays a minor role in monetary transmission. Second, we disentangle the investment channel of monetary policy into direct effects from interest rate changes and indirect general equilibrium effects. We find that the investment channel of monetary policy is due almost exclusively to direct effects. The two results imply that a representative firm framework with investment adjustment frictions provides a sufficiently detailed description of the investment channel of monetary policy.

Tobias König

Post-Doctoral Researcher in Economics

I am a postdoctoral researcher at the Institute of Finance and Statistics at the economics department of the University of Bonn and the Collaborative Research Center (CRC) TR 224.