{
  "title": "Monetary Policy and Intangible Investment",
  "publication": "IMF Working Papers, August 7, 2020",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2020/08/07/monetary-policy-and-intangible-investment-49623",
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  "summary": "We contrast how monetary policy affects intangible relative to tangible investment. We document that the stock prices of firms with more intangible assets react less to monetary policy shocks, as identified from Fed Funds futures movements around FOMC announcements.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The paper contrasts how monetary policy affects intangible relative to tangible investment.\n- Stock prices of firms with more intangible assets react less to monetary policy shocks, as identified from Fed Funds futures movements around FOMC announcements.\n- Instrumental variable local projections confirm:\n  - Total investment in firms with more intangible assets responds less to monetary policy.\n  - Intangible investment responds less to monetary policy compared to tangible investment."
    },
    {
      "heading": "Mechanisms identified",
      "content": "- Collateral channel:\n  - Firms with intangible assets use less collateral, and therefore respond less to the credit channel of monetary policy.\n- Depreciation / user cost channel:\n  - Intangible assets have higher depreciation rates, so interest rate changes affect their user cost of capital relatively less."
    },
    {
      "heading": "Empirical approach and evidence",
      "content": "- Identification of monetary policy shocks: Fed Funds futures movements around FOMC announcements.\n- Asset-price evidence: differential stock-price reactions by firms with varying intangible asset shares support the investment response results.\n- Econometric method: instrumental variable local projections used to estimate investment responses."
    },
    {
      "heading": "Key statistics and metadata preserved from the source",
      "content": "- Publication date: August 7, 2020\n- Pages: 53\n- Volume: 2020\n- Issue: 160\n- Series: Working Paper No. 2020/160\n- DOI: https://doi.org/10.5089/9781513552521.001\n- Stock No: WPIEA2020160\n- ISBN: 9781513552521\n- ISSN: 1018-5941"
    },
    {
      "heading": "Subjects and keywords",
      "content": "- Subject: Asset prices, Currencies, Depreciation, Intangible capital, Investment policy, Money, National accounts, Prices\n- Keywords: abnormal returns, adjustment cost, Asset prices, cost of capital, Currencies, Depreciation, differential monetary policy reaction, Heterogeneity, Intangible capital, intangible investment, Investment policy, investment response, Monetary Policy, monetary policy shock, response to monetary policy, Stock Returns, WP\n\nIMF Working Paper — Monetary Policy and Intangible Investment, by Robin Döttling and Lev Ratnovski (August 7, 2020).\n\n---\n\n Content in this bundle\n\n- Working Paper\n  - Working Paper (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Working Paper (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2020/08/07/monetary-policy-and-intangible-investment-49623"
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    "Authors: Robin Döttling, Lev Ratnovski",
    "Published: August 7, 2020",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781513552521.001",
    "The paper contrasts how monetary policy affects intangible relative to tangible investment.",
    "Stock prices of firms with more intangible assets react less to monetary policy shocks, as identified from Fed Funds futures movements around FOMC announcements.",
    "Instrumental variable local projections confirm:",
    "Collateral channel:",
    "Depreciation / user cost channel:",
    "Identification of monetary policy shocks: Fed Funds futures movements around FOMC announcements.",
    "Asset-price evidence: differential stock-price reactions by firms with varying intangible asset shares support the investment response results.",
    "Econometric method: instrumental variable local projections used to estimate investment responses.",
    "Publication date: August 7, 2020",
    "Pages: 53",
    "Volume: 2020",
    "Issue: 160",
    "Series: Working Paper No. 2020/160",
    "DOI: https://doi.org/10.5089/9781513552521.001",
    "Stock No: WPIEA2020160",
    "ISBN: 9781513552521",
    "ISSN: 1018-5941",
    "Subject: Asset prices, Currencies, Depreciation, Intangible capital, Investment policy, Money, National accounts, Prices",
    "Keywords: abnormal returns, adjustment cost, Asset prices, cost of capital, Currencies, Depreciation, differential monetary policy reaction, Heterogeneity, Intangible capital, intangible investment, Investment policy, investment response, Monetary Policy, monetary policy shock, response to monetary policy, Stock Returns, WP",
    "**Working Paper**"
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