Monetary Policy and Intangible Investment

Abstract

We document that the stock prices and investment of firms with more intangible assets respond less to monetary policy. Similarly, intangible investment responds less to monetary policy compared to tangible investment. These effects are most pronounced among financially constrained firms, indicating that corporate intangible capital weakens the credit channel of monetary policy transmission. The evidence that higher depreciation rates or higher adjustment costs of intangible assets explain these effects is mixed, suggesting a smaller role for these channels.

Keywords: Intangible Investment, Monetary Policy, Credit Channel, Stock Returns, Heterogeneity

JEL Classification: E22, E52, G31, G32