Firm Size and Monetary Policy Transmission — Evidence from German Business Survey Data

Abstract

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Markov-switching stochastic trends and economic fluctuations

“…8 In order to consider (−1, 1, 0) and 8 Following the BIC criterium, I selected a lag length of six. Parameters estimates are available upon…”

Does Monetary Policy Matter for Corporate Governance? Firm-Level Evidence From India

“…Using business survey data, findings for Germany have uncovered the evidence that smaller firms are more affected by monetary shocks than large firms (Ehrmann, 2000).…”

Firm heterogeneity and regional business cycles differentials

“…Specifically, firm size may be responsible for the transmission of monetary shocks through the so called "balance-sheet" and the "banklending" channels (Bernanke and Gertler, 1995;Carlino and DeFina, 1998;Guiso et al, 2000;Ehrmann, 2000;Dedola and Lippi, 2000). In the balance-sheet view, given asymmetric information, access to credit depends on the value of firms" assets, acting as collateral.…”

“…A tighter monetary policy reduces the amount of credit for borrowers when the central bank has a leverage over the volume of intermediated credit. Small firms, more dependent on intermediated credit, are adversely affected; large firms can instead rely on easier access to other forms of external finance (Christiano et al, 1996;Ehrmann, 2000;Dedola and Lippi, 2000).…”

“…Uncertainty remains for the effect of firm size on the probability to produce a normal level of output, Pr y 2 . We 4 The analyses of the effect of firm size on the transmission of monetary policy shock carried out by Christiano et al (1996), Ehrmann (2000), Dedola and Lippi (2000) and Carlino and DeFina (1998) are based on the use of Structural VAR approaches. The authors first identify either sectoral or regional differences in the output effect of unanticipated monetary policy shocks by means of impulse response functions and then use aggregated size composition measures (either at sectoral or regional level) as determinants of the monetary policy impacts.…”