Monetary Policy, Firms’ Inflation Expectations and Prices: Causal Evidence from Firm-Level Data

2019 ◽  
Author(s):  
Marco Bottone ◽  
Alfonso Rosolia
Keyword(s):  
Monetary Policy ◽  
Inflation Expectations ◽  
Firm Level ◽  
Level Data ◽  
Firm Level Data

scholarly journals Firm-Level Data and Monetary Policy

2019 ◽  
Vol 2019 (239) ◽  
Author(s):  
Lahcen Bounader ◽  
Mohamed Doukali
Keyword(s):  
Monetary Policy ◽  
Small And Medium Enterprises ◽  
Balance Sheet ◽  
Firm Level ◽  
Middle Income ◽  
Financing Decisions ◽  
Balance Sheet Channel ◽  
Level Data ◽  
Firm Level Data ◽  
Medium Enterprises

We test the existence of the balance sheet channel of monetary policy in a middle-income country. Firm-level data scarcity and quality, in such a context, make the identification of this channel a steep challenge. To circumvent this challenge, we use panel instrumental variables estimation with measurement error to analyze the financial statements of 58 500 Moroccan firms over the period 2010-2016. Our analysis confirms the existence of this channel. It shows that monetary policy has a significant impact on small and medium enterprises’ access to banks’ financing, and that firm-specific variables are key determinants of firms’ financing decisions.

The Effectiveness of Monetary Policy Anchors: Firm-Level Evidence

2010 ◽  
Vol 64 (4) ◽  
pp. 695-717 ◽  
Author(s):  
J. Lawrence Broz ◽  
Michael Plouffe
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Private Sector ◽  
Central Bank ◽  
Inflation Targeting ◽  
Substantial Reduction ◽  
Central Bank Independence ◽  
Inflation Expectations ◽  
Firm Level ◽  
Level Data

AbstractAnalyses of monetary policy posit that exchange-rate pegs, inflation targets, and central bank independence can help anchor private-sector inflation expectations. Yet there are few direct tests of this argument. We offer cross-national, micro-level evidence on the effectiveness of monetary anchors in controlling private-sector inflation concerns. Using firm-level data from eighty-one countries (approximately 10,000 firms), we find evidence that “international” anchors (exchange-rate commitments) correlate significantly with a substantial reduction in private-sector concerns about inflation while “domestic” anchors (inflation targeting and central bank independence) do not. Our conjecture is that private-sector inflation expectations are more responsive to exchange-rate anchors because they are more transparent, more constraining, and more costly than domestic anchoring arrangements.

Sign in / Sign up

Export Citation Format

Share Document