Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152545
Authors: 
Lünnemann, Patrick
Mathä, Thomas Y.
Year of Publication: 
2001
Series/Report no.: 
ECB Working Paper 111
Abstract: 
This paper investigates the transmission of monetary policy using data from a panel of Luxembourg firms. The results indicate that the sales accelerator may be at work. A very robust result is the negative effect of the user cost of capital on firms' investment ratio. Changes in user costs are significantly affected by changes in the monetary policy indicator. In addition, firm specific balance sheet characteristics, such as the lagged cash stock to capital ratio influence the investment behaviour according to the broad credit channel theory. Using various sample splits, it is shown that young firms, in particular, are more sensitive to user cost changes, sales growth and the lagged cash to capital ratio.
Subjects: 
credit channel
Investment
panel data
user cost of capital
JEL: 
D21
D92
E22
E52
Document Type: 
Working Paper

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