Monetary policy and local industry structure

No 2778, Working Paper Series from European Central Bank

Abstract: We study how monetary policy affects local market competition in a union of countries ex-periencing different economic conditions: the euro area. We find that when monetary conditions tighten (loosen), from the point of view of an individual economy, market concentration increases (declines). This effect is more pronounced when interest rates have been low-for-long, and it is stronger in sectors that are relatively more sensitive to changes in financing conditions. The underlying mechanism is a decline (increase) in short-term debt and investment by smaller and medium-size firms, relative to large firms, following monetary policy tightening (easing). JEL Classification: E2, G1, G12

Keywords: Competition; Eurozone; Low Interest Rates; Monetary Policy; Monetary Union (search for similar items in EconPapers)
Date: 2023-02
New Economics Papers: this item is included in nep-ban, nep-com, nep-eec and nep-mon
Note: 861282
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Related works:
Working Paper: Monetary Policy and Local Industry Structure (2023)
Working Paper: Monetary Policy and Local Industry Structure (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232778

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