Code for: Credit Supply Shocks and Prices: Evidence from Danish Firms

Principal Investigator(s): View help for Principal Investigator(s) Tobias Renkin, Danmarks Nationalbank; Gabriel Züllig, Swiss National Bank

Version: View help for Version V1

Name	File Type	Size	Last Modified
ReplicationPackage			02/14/2024 05:28:AM

Project Citation:

Renkin, Tobias, and Züllig, Gabriel. Code for: Credit Supply Shocks and Prices: Evidence from Danish Firms. Nashville, TN: American Economic Association [publisher], 2024. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2024-02-29. https://doi.org/10.3886/E188822V1

Project Description

Summary: We study the response of firms' output prices to a cut in credit supply. We combine data on loans between Danish firms and banks with survey-based producer prices and transaction-based export unit values. Exploiting banks’ heterogeneous exposure to the global financial crisis, we show that loans to firms with relationships to exposed banks drop and lending rates increase. In response, firms raise prices by 3-5%. This effect is decreasing in the elasticity of firms' demand but positive for most industrial production. Our results support the idea that firms use price increases to raise cash when external sources of liquidity dry up.

Scope of Project

Subject Terms: inflation; demand elasticity; bank lending; price-setting; liquidity

JEL Classification:
      D22 Firm Behavior: Empirical Analysis
      E31 Price Level; Inflation; Deflation
      E32 Business Fluctuations; Cycles
      E44 Financial Markets and the Macroeconomy
      G01 Financial Crises

Geographic Coverage: Denmark

Time Period(s): 2005 – 2012

Collection Date(s): 2005 – 2012

Universe: Danish manufacturing firms

Data Type(s): administrative records data; survey data

Methodology

Response Rate: Does not apply

Data Source: Statistics Denmark, Danmarks Nationalbank, Finanstilsynet

Collection Mode(s): other

Unit(s) of Observation: Firms, products

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Published Versions

V1 [2024-02-29]

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