Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/229058
Authors: 
Döttling, Robin
Ratnovski, Lev
Year of Publication: 
2020
Series/Report no.: 
ECB Working Paper No. 2444
Abstract: 
We contrast how monetary policy affects intangible relative to tangible investment. We document that the stock prices of firms with more intangible assets react less to monetary policy shocks, as identified from Fed Funds futures movements around FOMC announcements. Consistent with the stock price results, instrumental variable local projections confirm that the total investment in firms with more intangible assets responds less to monetary policy, and that intangible investment responds less to monetary policy compared to tangible investment. We identify two mechanisms behind these results. First, firms with intangible assets use less collateral, and therefore respond less to the credit channel of monetary policy. Second, intangible assets have higher depreciation rates, so interest rate changes affect their user cost of capital relatively less.
Subjects: 
Intangible Investment
Monetary Policy
Stock Returns
Heterogeneity
JEL: 
E22
E52
G32
Persistent Identifier of the first edition: 
ISBN: 
978-92-899-4087-0
Document Type: 
Working Paper

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