Click here to download

Differential effects of monetary policy on the investments of Italian industrial firms: a panel analysis
Journal Title: RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO 
Author/s: Giuseppe Cinquegrana 
Year:  2014 Issue: 3 Language: Italian 
Pages:  39 Pg. 40-78 FullText PDF:  232 KB
DOI:  10.3280/REST2014-003002
(DOI is like a bar code for intellectual property: to have more infomation:  clicca qui   and here 


This work analyses the impact of monetary policy shocks on the investment decisions of Italian firms, taking into account different responses according to their geographic location. Method and Results. We estimate an accelerator dynamic panel model using a Generalized Method of Moments approach. The estimated coefficients seem to confirm the presence of a territorial asymmetry between the productive industrial units of the Centre-North and the ones of the South of Italy in the investments’ sensitivity to the variations in the user cost of capital for each firm as consequence of changes in the reference interest rate adopted by monetary Authority. The results show that, contrary to what happens in the Centre-North, the medium term investments of Southern industrial firms do not increase in response to the reduction of the interest rates. Conclusions. Thus, the activity of accumulation for industrial enterprises in the South of Italy does not seem to be sensitive to the pulses produced by expansionary monetary policies, since the inefficiency of the local financial system and the presence of institutional constraints, being the determining factors for the high cost of bank financing for southern firms, make it sticky the traditional channel of monetary transmission.
Keywords: Monetary policy, territorial asymmetry, interest rates, user cost of capital, industrial investments
Jel Code: E52-C10-R10-D22

  1. Almeida H., Campello M. (2001), Financial Constraints and Investment Cash-flow Sensitivities: New Research Directions, Working paper, New York University.
  2. Almeida H., Campello M., Weisbach M. (2004), The Cash Flow Sensitivity of Cash, Journal of Finance, 59, pp. 1777-1804.
  3. Alti A. (2003), How Sensitive is Investment to Cash Flow When Financing is frictionless ?, Journal of Finance, 58, pp. 707-722.
  4. Arellano M., Bond S. (1991), Some Tests of Spec.cation for Panel Data: Monte Carlo Evidence and an Application to Employment Equations, Review of Economic Studies, 58, pp. 277-297. Banca centrale europea, Bollettino mensile.
  5. Becchetti L., Castelli A., Hasan I. (2008), Investment-Cash Flow Sensitivities, credit rationing and financing constraints, Bank of Finland Research, Discussion Papers, 15.
  6. Bernanke B.S., Blinder A.S. (1988), Credit, Money and Aggregate Demand, The American Economic Review, 82, 4, Sep. 1992, pp. 901-921.
  7. Bernanke B.S., Gertler M., Gilchrist S. (1996), The Financial Accelerator and the Flight to Quality, Review of Economics And Statistics, 78, 1, pp. 1-15.
  8. Bond S., Elston J., Mairesse J., Mulkay B. (1997), Financial Factors and Investment in Belgium, France, Germany and the UK: a Comparison using Company Panel Data, NBER Working paper, 5900.
  9. Bond S., Meghir C. (1994), Dynamic Investment Models and the Firm’s Financial Policy, Review of Economic Studies, 61, pp. 197-222.
  10. Chirinko R.S. (1993), Business Fixed Investment Spending: Modeling Strategies, Empirical Results, and Policy Implications, Journal of Economic Literature, XXXI, pp. 1875-1911.
  11. Chirinko R.S., Fazzari S.M., Meyer A.P. (1999), How Responsive is Business Capital Formation to its User Cost? An Exploration with Micro Data, Journal of Public Economics, 74, pp. 53-80.
  12. Cinquegrana G., Donati C., Sarno D. (2012), Vincoli di finanza interna e relationship lending nella crescita delle piccole e medie imprese italiane e del Mezzogiorno.
  13. In Giannola A., Lopes A. e Sarno D. (a cura di), I problemi dello sviluppo economico e del suo finanziamento nelle aree deboli. Roma: Carocci.
  14. Cinquegrana G., Sarno D. (2009), Crescita e sensibilità degli investimenti al cash flow delle imprese del Mezzogiorno, Studi economici, 97, 1, pp. 91-109.
  15. De Grauwe P., Dewachter H., Aksoy Y. (1999), The European Central Bank: Decision Rules and Macroeconomic Performance, CEPR Discussion Paper, 2067, February. De Mitri S., Marchetti D.J., Staderini A. (1998), Il costo d’uso del capitale nelle imprese italiane: un’analisi disaggregata. Roma: Banca d’Italia, mimeo.
  16. Dragone P. (2012), La performance delle banche italiane (19998-2008): redditività e creazione del valore. Una prospettiva territoriale. In Giannola A., Lopes A. e Sarno D. (a cura di), I problemi dello sviluppo economico e del suo finanziamento nelle aree deboli. Roma: Carocci.
  17. Favero C., Giavazzi F. (1999), An Evaluation of Monetary Policy Transmission in the Context of the European Central Bank, A Report to the European Parliament, April.
  18. Fazzari S.M. (1993), Investment and US Fiscal Policy in the 1990s, Public Policy Brief, October.
  19. Fazzari S.M., Hubbard R.G., Petersen B.C. (1988), Financing Constraints and Corporate Investment, Brookings Papers on Economic Activity, 1, pp. 141-195.
  20. Gaiotti E. (1999), The Transmission of Monetary Shocks in Italy, 1967-1997, Banca d’Italia, Temi di discussione, 363.
  21. Gaiotti E., Generale A. (2001), Does Monetary Policy have Asymmetric Effects? A Look at the Investment Decision of Italian Firms, European Central Bank, Working paper, 110.
  22. Gaiotti E., Generale A. (2001), Credit Availability and Investment in Italy: lessons from the “Great Recession”, Banca d’Italia, Temi di discussione, 729.
  23. Georgopoulos G. (2009), Measuring Regional Effects of Monetary Policy in Canada, Applied Economics, 41, pp. 2093-2113.
  24. Gertler M., Gilchrist S. (1994), Monetary Policy, Business Cycles and the Behavior of Small Manufacturing Firms, Quarterly Journal of Economics, 109, 2, pp. 309-340.
  25. Gertler M., Hubbard R.G., Kashyap A. (1991), Interest Rate Spreads, Credit Constraints and Investment Fluctuations: An Empirical Investigation. In Hubbard R.G. (ed.), Financial Markets and Financial Crises. Chicago.
  26. Giannola A., Sarno D. (2004), Strutture finanziarie, vincoli di liquidità, performance e crescita delle imprese. Un’analisi territoriale. In Bagella M., Finanza e crescita, quali vincoli, quali rischi?. Bologna: Il Mulino.
  27. Giordano L., Lopes A. (2012), Le banche italiane tra consolidamento e recuperi di efficienza (1998-2008). Una promessa mantenuta?. In Giannola A., Lopes A. e Sarno D. (a cura di), I problemi dello sviluppo economico e del suo finanziamento nelle aree deboli. Roma: Carocci.
  28. Hubbard R.G., Kashyap A., Whited T. (1995), Internal Finance and Firm Investment, Journal of Money, Credit, and Banking, 27, pp. 683-701.
  29. ISTAT (2012), Misure di produttività, Statistiche Report, 21 novembre.
  30. Jensen M., Meckling W. (1976), Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, Journal of Financial Economics, III, 4, pp. 305-360.
  31. Kaplan S., Zingales L. (1997), Do Financing Constraints Explain why Investment is Correlated with Cash Flow?, Quarterly Journal of Economics, 112, pp. 169-215. Messori M., Mattesini F. (2005), L’evoluzione del sistema bancario meridionale: problemi aperti e possibili soluzioni. Bologna: Il Mulino.
  32. Moyen N. (2004), Investment-cash Flow Sensitivity: Constrained versus Unconstrained Firms, Journal of Finance, 59, pp. 2061-2092.
  33. Onado M. (2000), Mercati e intermediari finanziari. Economia e regolamentazione. Bologna: Il Mulino.
  34. Panetta F. (2003), Evoluzione del sistema bancario e finanziamento dell’economia nel Mezzogiorno, Banca d’Italia, Tema di discussione, 467.
  35. Relazione annuale del Governatore della Banca d’Italia (2002).
  36. Relazione annuale del Governatore della Banca d’Italia (2003).
  37. Relazione annuale del Governatore della Banca d’Italia (2004).
  38. Relazione annuale del Governatore della Banca d’Italia (2005).
  39. Sarno D., Cinquegrana G. (2009), Vincoli finanziari e sensibilità degli investimenti al cash flow nelle imprese de Mezzogiorno, Studi economici, 97.
  40. Schiantarelli F. (1995), Financial Constraints and Investment: A Critical Review of Methodological Issues and International Evidence, Boston College Working paper, 293.
  41. Stiglitz J.E., Weiss A. (1981), Credit Rationing in Markets with Imperfect Information, American Economic Review, 71, pp. 393-410.

Giuseppe Cinquegrana, Differential effects of monetary policy on the investments of Italian industrial firms: a panel analysis in "RIVISTA DI ECONOMIA E STATISTICA DEL TERRITORIO" 3/2014, pp. 40-78, DOI:10.3280/REST2014-003002

   

FrancoAngeli is a member of Publishers International Linking Association a not for profit orgasnization wich runs the CrossRef service, enabing links to and from online scholarly content