The effect of firm cash holding on monetary policy

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To access the full text documents, please follow this link: http://hdl.handle.net/10230/27022

dc.contributor.author	Adão, Bernardino
dc.contributor.author	Silva, André C.
dc.date	2015-12
dc.identifier.uri	http://hdl.handle.net/10230/27022
dc.format	application/pdf
dc.language.iso	eng
dc.relation	Ademu Working Papers Series; 11
dc.relation	info:eu-repo/grantAgreement/EC/H2020/649396
dc.rights	This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.rights	This is an Open Access article distributed under the terms of the Creative Commons Attribution License Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution and reproduction in any medium provided that the original work is properlyattributed.
dc.rights	https://creativecommons.org/licenses/by/4.0/
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	Firm cash holdings
dc.subject	Interest rates
dc.subject	Financial frictions
dc.subject	Market segmentation
dc.subject	Liquidity effect
dc.subject	Monetary policy
dc.title	The effect of firm cash holding on monetary policy
dc.type	info:eu-repo/semantics/workingPaper
dc.description.abstract	Firm cash holdings increased substantially from 1980 to 2013. The overall distribution of firm cash holdings changed in the same period. We study the implications of these changes for monetary policy. We use Compustat data and a model with financial frictions that allows the calculation of the monetary policy effects according to the distribution of cash holdings. We find that the interest rate channel of the transmission of monetary policy has become more powerful, as the impact of monetary policy over real interest rates increased. With the observed changes in firm cash holdings, the real interest rate takes 3.4 months more to return to its initial value after a shock to/nthe nominal interest rate.
dc.description.abstract	The ADEMU Working Paper Series is being supported by the European Commission Horizon 2020 European Union funding for Research & Innovation, grant agreement No 649396.

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