Replication data for: Monetary Policy and the Financing of Firms

Principal Investigator(s): View help for Principal Investigator(s) Fiorella De Fiore; Pedro Teles; Oreste Tristani

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AEJ_Macro_2009-0075			10/12/2019 09:16:PM
LICENSE.txt	text/plain	14.6 KB	10/12/2019 05:16:PM

Project Citation:

De Fiore, Fiorella, Teles, Pedro, and Tristani, Oreste. Replication data for: Monetary Policy and the Financing of Firms. Nashville, TN: American Economic Association [publisher], 2011. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114228V1

Project Description

Summary: How should monetary policy respond to changes in financial conditions? We consider a simple model where firms are subject to shocks which may force them to default on their debt. Firms' assets and liabilities are nominal and predetermined. Monetary policy can therefore affect the real value of funds used to finance production. In this model, allowing for inflation volatility in response to aggregate shocks can be optimal; the optimal response to adverse financial shocks is to lower interest rates and to engineer some inflation; and the Taylor rule may implement allocations that have opposite cyclical properties to the optimal ones. (JEL G32, E31, E43, E44, E52)

Scope of Project

JEL Classification:
      E31 Price Level; Inflation; Deflation
      E43 Interest Rates: Determination, Term Structure, and Effects
      E44 Financial Markets and the Macroeconomy
      E52 Monetary Policy
      G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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V1 [2019-10-12]

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