Monetary Policy and Corporate Debt Maturity

Firm Heterogeneity, Market Power and Macroeconomic Fragility

“…Recent models of oligopoly (see Azar and Vives, 2021) lend themselves to the study of the interaction between two-sided market power and the likelihood of quasi-permanent recessions. Lastly, recent work studies the interplay between competition and monetary policy (see Mongey, 2019;Wang and Werning, 2020;Fabiani et al, 2021). The question of how monetary policy, by changing the market structure, shapes the dynamic properties of an economy is an avenue for future research.…”

Financial Shock Transmission to Heterogeneous Firms: The Earnings-Based Borrowing Constraint Channel

“…This ensures that global risk shocks are purged of any confounding e↵ects of actions by the Federal Reserve on global risk appetite. While US monetary policy has been identified as a driver of the Global Financial Cycle (Rey, 2015) and hence of global risk-o↵ episodes (Miranda-Agrippino & Rey, 2020, 2022, there are numerous episodes of heightened global risk that are disconnected from US monetary policy (Caldara et 1 A non-exhaustive body of work includes Anderson and Cesa-Bianchi (2023), Arbatli Saxegaard et al (2022), Cao et al (2023), Cloyne et al (2018), Fabiani et al (2022), Ferreira et al (2023), Jeenas (2019), Jungherr et al (2022), Öztürk (2022), Palazzo and Yamarthy (2022), and Smolyansky and Suarez (2021).…”

“…7 In a similar manner, Cieslak and Schrimpf (2019) combine monotonicity restrictions across maturities in the yield curve with high-frequency comovement in equity prices and interest rates to obtain monetary policy shocks purged of macroeconomic news from monetary policy communication. 8 Examples of papers that employ high-frequency shock identification in this context include Anderson and Cesa-Bianchi (2023), Arbatli Saxegaard et al (2022), Cloyne et al (2018), Fabiani et al (2022), Jeenas (2019), and Smolyansky and Suarez (2021). 9 The heterogeneous impact of monetary policy on investment of riskier firms is also found to result from the (2022) who find that firms with low default risk are the most responsive to monetary shocks because they face a flatter marginal cost curve for financing investment.…”

“…Section 5 presents the results of the firm-level regressions and local projections, including robustness checks and Section 6 concludes. structure of corporate debt maturity which makes firms with higher rollover risk and higher nominal debt burden more sensitive (Fabiani et al, 2022;Jungherr et al, 2022). 10 Other studies show that the earnings-based borrowing constraint is prevalent also among small firms (Caglio et al, 2021) and emerging market firms (Camara & Sangiacomo, 2022).…”

Financial Shock Transmission to Heterogeneous Firms: The Earnings-Based Borrowing Constraint Channel

“…This ensures that global risk shocks are purged of any confounding effects of actions by the Federal Reserve on global risk appetite. While US monetary policy has been identified as a driver of the Global Financial Cycle (Rey, 2015) and hence of global risk-off episodes (Miranda-Agrippino & Rey, 2020, 2022, there are numerous episodes of heightened global risk that are disconnected from US monetary policy (Caldara et 1 A non-exhaustive body of work includes Anderson and Cesa-Bianchi (2023), Arbatli Saxegaard et al (2022), Cao et al (2023), Cloyne et al (2018), Fabiani et al (2022), Ferreira et al (2023), Jeenas (2019), Jungherr et al (2022), Öztürk (2022), Palazzo and Yamarthy (2022), and Smolyansky and Suarez (2021).…”