Firm Investment and Monetary Policy Transmission in the Euro Area

Arbeitspapier

We present a comparable set of results on the monetary transmission channels on firm investment for the four largest euro-area countries (Germany, France, Italy and Spain). With particularly rich micro datasets for each country containing over 215,000 observations from 1985 to 1999, we explore what can be learned about the interest channel and the broad credit channel. For each of those countries, we estimate neoclassical investment relationships, explaining investment by its user cost, sales and cash flow. We find investment to be sensitive to user cost changes in all those four countries. This implies an operative interest channel in these euro-area countries. We also find investment in all countries to be quite sensitive to cash flow movements. However, only in Italy do smaller firms react more to cash flow movements than large firms, implying that a broad credit channel might not be equally pervasive in all countries.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Discussion Paper Series 1 ; No. 2001,20

Classification and Topics

• Classification: Wirtschaft ; Investment; Capital; Intangible Capital; Capacity ; Monetary Policy, Central Banking, and the Supply of Money and Credit: General
• Subject: Investition ; Monetäre Transmission ; Kapitalnutzungskosten ; investment ; monetary transmission ; user cost of capital ; Transmissionsmechanismus ; Investition ; Kapitalkosten ; Transmissionsmechanismus ; Investition ; Kapitalkosten ; Deutschland ; Frankreich ; Italien ; Spanien ; Deutschland ; Frankreich ; Italien ; Spanien

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): von Kalckreuth, Ulf ; Hernando, Ignacio ; Generale, Andrea ; Chatelain, Jean Bernard ; Vermeulen, Philip
• Event: Veröffentlichung
• (who): Deutsche Bundesbank
• (where): Frankfurt a. M.
• (when): 2001

Further information

• Handle: http://hdl.handle.net/10419/19557
• Last update: 10.03.2025, 11:42 AM CET