Q-Monetary Transmission

Priit Jeenas; Ricardo Lagos

doi:10.3386/w30023

Q-Monetary Transmission

Priit Jeenas & Ricardo Lagos

Working Paper 30023

DOI 10.3386/w30023

Issue Date May 2022

Revision Date June 2023

We study the effects of monetary-policy-induced changes in Tobin's q on corporate investment and capital structure. We develop a theory of the mechanism, provide empirical evidence, evaluate the ability of the quantitative theory to match the evidence, and quantify the relevance for monetary transmission to aggregate investment.

We thank Sebastián Fanelli, Pascal Paul, and Ander Pérez-Orive for their useful discussions. We also thank Vladimir Asriyan, Isaac Baley, Jordi Galí, Victoria Vanasco, and Jaume Ventura for their feedback. Jeenas acknowledges financial support from the Juan de la Cierva - Formación Grant (FJC2019-041561) by the Spanish Ministry of Science, Innovation, and Universities, from the Plan Estatal de Investigación Científica y Técnica y de Innovación 2017-2020 (PID2020-116268GB-I00), and from the Spanish Ministry of Economy and Competitiveness, through the Severo Ochoa Programme for Centres of Excellence in R&D (CEX2019-000915-S). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
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- May 4, 2022
- August 3, 2022

Q-Monetary Transmission

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