Q-Monetary Transmission

Authors: Priit Jeenas and Ricardo Lagos

Journal of Political Economy, Vol. 132, No 3, 971 - 1012, December, 2023

We study the effects of monetary-policy-induced changes in Tobin's q on corporate investment and capital structure. We develop a theory of the mechanism, provide empirical evidence, evaluate the ability of the quantitative theory to match the evidence, and quantify the relevance for monetary transmission to aggregate investment.

This paper originally appeared as Barcelona School of Economics Working Paper 1348