Research

Working Papers

Corporate Debt Structure and Heterogeneous Monetary Policy Transmission

with Nuno Coimbra and Urszula Szczerbowicz

[BdF Working Paper 933] [CEPR Discussion Paper] [VoxEU]

Using French firm data, we show that corporate debt structure plays a significant role in monetary policy transmission. In addition to interest rate policy, we analyse the impact of a novel ECB-induced sovereign spread shock, related to credit risk and liquidity, and show that both types of policy tightening diminish French firms’ investment. The transmission of conventional shocks is stronger for firms with higher shares of bank debt, but contractionary bond spread shocks lower investment more for firms with higher shares of bond debt. Bond liquidity and credit risk tightening leads to higher bond-bank loan interest rate spreads and lower bond issuance.

Presented at EABCN Conference: New Challenges in Monetary Economics 2024 (poster), JIE Summer School 2024 (poster), Workshop on New insights from financial statements 2024, 3rd XAmsterdam Macroeconomic Workshop.

From Free to Fee: How Allowance Allocation Affects ETS Performance

with Eva Franzmeyer and Benjamin Hattemer

[Draft]

This study provides causal firm-level estimates of the effect of a reduction in free emission allowances in emission trading systems on emissions and economic performance. We study an EU ETS reform that withdrew the right of some manufacturing firms to receive most emission allowances for free, exploiting this change in a difference in-differences setting. We find that paying for allowances decreased emissions by more than 11 percent overall, relative to firms that retained free allowances. This reduction was accompanied by a significant decrease in economic performance, including revenue, employment, and assets of a similar magnitude. Using a multi-product model, we show that our results can be rationalized through an extensive margin adjustment of firms.