Adra, S. orcid.org/0000-0002-0187-2607, Gao, Y. and Yuan, J. (2024) Local policy uncertainty and the firm's investment reaction to monetary policy. Economics Letters, 234. 111473. ISSN 0165-1765
Abstract
Rising local economic policy uncertainty increases the firm's capital investment sensitivity to monetary shocks. This effect is driven by the tendency of uncertainty-driven precautionary behavior to increase the firm's propensity to reduce investment in response to contractionary monetary shocks. This effect is more pronounced for geographically bound firms that are financially constrained. Our results show how the investment effects of local economic policy uncertainty are entangled with the asymmetries that govern the economic impact of monetary policy.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2023 The Authors. Except as otherwise noted, this author-accepted version of a journal article published in Economics Letters is made available via the University of Sheffield Research Publications and Copyright Policy under the terms of the Creative Commons Attribution 4.0 International License (CC-BY 4.0), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited. To view a copy of this licence, visit http://creativecommons.org/licenses/by/4.0/ |
Keywords: | Monetary policy; Capital investments; Local economic policy uncertainty |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 11 Dec 2023 14:51 |
Last Modified: | 12 Dec 2023 03:29 |
Status: | Published |
Publisher: | Elsevier BV |
Refereed: | Yes |
Identification Number: | 10.1016/j.econlet.2023.111473 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:206420 |