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Dr. Thomas Winberry, Chicago Booth

Dr. Thomas Winberry, Chicago Booth


Gerri C. LeBow Hall
3220 Market Street
Rm. 722
Philadelphia, PA 19104
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Dr. Winberry will present “Financial Heterogeneity and the investment Channel of Monetary Policy”

Abstract
We study the role of heterogeneity in firms’ financial positions in determining the
investment channel of monetary policy. Empirically, we show that firms with low
leverage or high credit ratings are the most responsive to monetary policy shocks. We
develop a heterogeneous firm New Keynesian model with default risk to interpret these
facts and study their aggregate implications. In the model, firms with high default risk
are less responsive to monetary shocks because their marginal cost of external finance
is high. The aggregate effect of monetary policy therefore depends on the distribution
of default risk across firms.

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Who should attend?

Audience

  • Faculty
  • PhD

Disciplines

  • Economics