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Discussion Paper
Distressed Firms and the Large Effects of Monetary Policy Tightenings
The stance of U.S. monetary policy has tightened significantly starting in March 2022. At the same time, the share of firms in financial distress has reached a level that is higher than during most previous tightening episodes since the 1970s.
Discussion Paper
The Potential Increase in Corporate Debt Interest Rate Payments from Changes in the Federal Funds Rate
This note studies the response of interest expenses of U.S. nonfinancial corporations to an increase in interest rates.
Discussion Paper
The Information in Interest Coverage Ratios of the US Nonfinancial Corporate Sector
Using firm-level data, we find significant variability in interest coverage ratios--across firms and economic sectors and across time--that suggests that critical ICR levels depend on firm- or sector-specific economic conditions.
Working Paper
Monetary Policy under Multiple Financing Constraints
We revisit the credit channel of monetary policy when firms face multiple financing constraints. Our theory shows that the multiplicity of constraints dampens the transmission of expansionary policy to firm borrowing and investment notably but amplifies the transmission of policy tightening. This asymmetry arises because, when policy tightens (eases), the most (least) responsive constraint binds. Using U.S. firm-level data and exploiting a quasi-natural experiment, we find strong support for these predictions. Embedding the mechanism into a New Keynesian framework, we find that the drop in ...