Employment and the Collateral Channel of Monetary Policy

Saleem Bahaj, Angus Foulis, Gabor Pinter and Paolo Surico

No 1832, Discussion Papers from Centre for Macroeconomics (CFM)

Abstract: This paper uses a detailed firm-level dataset to show that monetary policy propagates via asset prices through corporate debt collateralised on real estate. Our research design exploits the fact that many small and medium sized firms use the homes of the firm’s directors as a key source of collateral, and directors’ homes are typically not in the same region as their firm. This spatial separation of firms and firms’ collateral allows us to separate the propagation of monetary policy via fluctuations in collateral values from that via demand channels. We find that younger and more levered firms who have collateral values that are particularly sensitive to monetary policy show the largest employment response to monetary policy. The collateral channel explains a sizeable share of the aggregate employment response.

Pages: 74 pages
Date: 2018-12
New Economics Papers: this item is included in nep-cba and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://www.centreformacroeconomics.ac.uk/Discussio ... MDP2018-32-Paper.pdf (application/pdf)

Related works:
Working Paper: Employment and the collateral channel of monetary policy (2019)
Working Paper: Employment and the collateral channel of monetary policy (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cfm:wpaper:1832

Access Statistics for this paper

More papers in Discussion Papers from Centre for Macroeconomics (CFM) Contact information at EDIRC.
Bibliographic data for series maintained by Helen Power ().