IFDP Paper: Corporate Debt Maturity Matters for Monetary Policy

Joachim Jungherr, Matthias Meier, Timo Reinelt, and Immo SchottWe provide novel empirical evidence that firms’ investment is more responsive to monetary policy when a higher fraction of their debt matures. In a heterogeneous firm New Keynesian model with financial frictions and endogenous debt maturity, two channels explain this finding: (1.) Firms with more maturing debt have larger roll-over needs and are therefore more exposed to fluctuations in the real interest rate (roll-over risk).

FEDS Paper: Inflation Disagreement Weakens the Power of Monetary Policy

Ding Dong, Zheng Liu, Pengfei Wang, and Min WeiWe present empirical evidence that household inflation disagreement weakens the power of forward guidance and conventional monetary policy shocks. The attenuation effect is stronger when inflation forecasts are positively skewed and it is not driven by endogenous responses of inflation disagreement to contemporaneous shocks. These empirical observations can be rationalized by a model featuring heterogeneous beliefs about the central banks' inflation target.

FEDS Paper: Duration of Capital Market Exclusion: An Empirical Investigation

Daniel A. Dias, Christine Richmond, and Grant WestfahlThis paper investigates the duration of market exclusion following a sovereign default and its resolution. We employ multiple definitions of market access, differentiating between gross versus net borrowing and partial versus full access, to measure the time it takes for countries to regain entry into international capital markets following a sovereign default and resolution.

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