Market Concentration, Macroeconomic Uncertainty and Monetary Policy Articles uri icon

authors

  • GIOVANNONI, FRANCESCO
  • TENA HORRILLO, JUAN DE DIOS

publication date

  • August 2008

start page

  • 1097

end page

  • 1123

issue

  • 6

volume

  • 52

international standard serial number (ISSN)

  • 0014-2921

electronic international standard serial number (EISSN)

  • 1873-572X

abstract

  • This paper studies the effect of market structure and macroeconomic uncertainty on the transmission of monetary policy. We motivate our analysis with a simple model which predicts that: (1) investment and production in more concentrated sectors are more affected by demand shocks and (2) high uncertainty makes investment and production more sensitive to demand shocks. The empirical analysis estimates the effect of monetary shocks on sectoral output for different sectors in the US using a structural vector autoregressive (VAR) approach. The results are generally consistent with the theoretical predictions.