Monetary policy, firm heterogeneity, and product variety
This study provides new insights on the allocative effect of monetary policy. It shows that contractionary monetary policy exerts an important reallocation effect by cleansing unproductive firms and enhancing aggregate productivity. At the same time, however, reallocation involves a reduction in the...
| Main Authors: | , |
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| Format: | Journal article |
| Language: | English |
| Published: |
Elsevier
2022
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| _version_ | 1797107472112025600 |
|---|---|
| author | Hamano, M Zanetti, F |
| author_facet | Hamano, M Zanetti, F |
| author_sort | Hamano, M |
| collection | OXFORD |
| description | This study provides new insights on the allocative effect of monetary policy. It
shows that contractionary monetary policy exerts an important reallocation effect
by cleansing unproductive firms and enhancing aggregate productivity. At the same
time, however, reallocation involves a reduction in the number of product variety
that is central to consumer preferences and hurts welfare. A contractionary policy
prevents the entry of new firms and insulates incumbent firms from competition,
reducing aggregate productivity. We provide empirical evidence on U.S. data that
corroborates the relevance of monetary policy for product variety resulting from
firm entry and exit.
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| first_indexed | 2024-03-07T07:15:05Z |
| format | Journal article |
| id | oxford-uuid:4c1f5efc-6884-40ae-a087-68d94b232352 |
| institution | University of Oxford |
| language | English |
| last_indexed | 2024-03-07T07:15:05Z |
| publishDate | 2022 |
| publisher | Elsevier |
| record_format | dspace |
| spelling | oxford-uuid:4c1f5efc-6884-40ae-a087-68d94b2323522022-08-15T10:56:42ZMonetary policy, firm heterogeneity, and product varietyJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:4c1f5efc-6884-40ae-a087-68d94b232352EnglishSymplectic ElementsElsevier2022Hamano, MZanetti, FThis study provides new insights on the allocative effect of monetary policy. It shows that contractionary monetary policy exerts an important reallocation effect by cleansing unproductive firms and enhancing aggregate productivity. At the same time, however, reallocation involves a reduction in the number of product variety that is central to consumer preferences and hurts welfare. A contractionary policy prevents the entry of new firms and insulates incumbent firms from competition, reducing aggregate productivity. We provide empirical evidence on U.S. data that corroborates the relevance of monetary policy for product variety resulting from firm entry and exit. |
| spellingShingle | Hamano, M Zanetti, F Monetary policy, firm heterogeneity, and product variety |
| title | Monetary policy, firm heterogeneity, and product variety |
| title_full | Monetary policy, firm heterogeneity, and product variety |
| title_fullStr | Monetary policy, firm heterogeneity, and product variety |
| title_full_unstemmed | Monetary policy, firm heterogeneity, and product variety |
| title_short | Monetary policy, firm heterogeneity, and product variety |
| title_sort | monetary policy firm heterogeneity and product variety |
| work_keys_str_mv | AT hamanom monetarypolicyfirmheterogeneityandproductvariety AT zanettif monetarypolicyfirmheterogeneityandproductvariety |