Replication data for: Corporate Finance and Monetary Policy

Principal Investigator(s): View help for Principal Investigator(s) Guillaume Rocheteau; Randall Wright; Cathy Zhang

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Project Citation:

Rocheteau, Guillaume, Wright, Randall, and Zhang, Cathy. Replication data for: Corporate Finance and Monetary Policy. Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E113149V1

Project Description

Summary: We develop a general equilibrium model where entrepreneurs finance random investment opportunities using trade credit, bank-issued assets, or currency. They search for bank funding in over-the-counter markets where loan sizes, interest rates, and down payments are negotiated bilaterally. The theory generates pass-through from nominal interest rates to real lending rates depending on market microstructure, policy, and firm characteristics. Higher banks' bargaining power, for example, raises pass-through but weakens transmission to investment. Interest rate spreads arise from liquidity, regulatory, and intermediation premia and depend on policy described as money growth or open market operations.

Scope of Project

JEL Classification:
      E43 Interest Rates: Determination, Term Structure, and Effects
      E52 Monetary Policy
      G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
      G31 Capital Budgeting; Fixed Investment and Inventory Studies; Capacity
      G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
      L26 Entrepreneurship

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Published Versions

V1 [2019-10-12]

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