European Business Schools Librarian's Group
Department of Economics Working Papers,
Vienna University of Economics and Business, Department of Economics
No 333: Monetary Policy and Local Industry Structure
Lea Steininger () and Alexander A. Popov ()
Additional contact information
Lea Steininger: Department of Economics, Vienna University of Economics and Business; Vienna Institute for International Economic Studies
Alexander A. Popov: Monetary Policy Research Division, European Central Bank
Abstract: We study how monetary policy affects local market competition in a union of countries experiencing different economic conditions: the euro area. We find that when monetary conditions tighten (loosen), from the point of view of an individual economy, market concentration increases (declines). This effect is more pronounced when interest rates have been low-for-long, and it is stronger in sectors that are relatively more sensitive to changes in financing conditions. The underlying mechanism is a decline (increase) in short-term debt and investment by smaller and medium-size firms, relative to large firms, following monetary policy tightening (easing).
Keywords: Eurozone, Monetary Union, Monetary Policy, Low Interest Rates, Competition
JEL-codes: E2; G1; G12 February 2023
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