Employment and the residential collateral channel of monetary policy

Bahaj, S, Foulis, A, Pinter, G and Surico, P (2022) Employment and the residential collateral channel of monetary policy. Journal of Monetary Economics. ISSN 0304-3932 (In Press)


Using micro-data covering private and public UK firms, we document heterogeneous responses to monetary policy; finding that employment at younger, more-levered firms is most sensitive. This heterogeneity is consistent with firm-level financial constraints. To show this, we exploit the fact that the homes of company directors are a key source of corporate collateral, but many directors live in a different region to their firm, allowing specifications controlling for demand. Younger, more-levered firms exposed to collateral fluctuations drive the employment response, showing a residential collateral channel in the transmission of monetary policy to firms.

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Item Type: Article
Subject Areas: Economics
Date Deposited: 10 Oct 2022 12:37
Last Modified: 19 Jun 2024 01:44
URI: https://lbsresearch.london.edu/id/eprint/2612

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