Firm balance sheet liquidity, monetary policy shocks, and investment dynamics
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- dc.contributor.author Jeenas, Priit
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:09:34Z
- dc.date.available 2024-11-14T10:09:34Z
- dc.date.issued 2023-10-01
- dc.date.modified 2024-11-14T10:09:08Z
- dc.description.abstract I study the role of firms' balance sheet liquidity in the transmission of monetary policy to investment. In response to monetary contractions, U.S. firms with fewer liquid asset holdings reduce investment relatively more. This can be explained by their higher likelihood to issue debt and the implied exposure to borrowing cost fluctuations. I rationalize these results using a heterogeneous firm macroeconomic model with financial constraints, debt issuance costs, and differential returns on cash and borrowing. Compared to a framework which ignores liquidity considerations, monetary transmission to aggregate investment is slightly dampened and depends on liquid asset portfolios beyond net worth.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1872
- dc.identifier.citation
- dc.identifier.uri http://hdl.handle.net/10230/68555
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1872
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword monetary policy
- dc.subject.keyword investment
- dc.subject.keyword financial frictions
- dc.subject.keyword firm heterogeneity
- dc.subject.keyword Macroeconomics and International Economics
- dc.title Firm balance sheet liquidity, monetary policy shocks, and investment dynamics
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper