Through the supply chains it may not transmit? A case of monetary policy bottlenecks
Type
working paper
Date Issued
2026-06-04
Author(s)
Abstract
We investigate the transmission of monetary policy through the supply chains with US data on corporate linkages. Our analysis uncovers three key insights. First, contractionary monetary conditions lead to disruptions in financially constrained firms’ purchases and sales. Second, these disruptions extend to the unconstrained suppliers and customers of such firms. Third, disruptions intensify when financially constrained firms purchase or sell specialized goods. These findings suggest that monetary tightening creates bottlenecks in supply chains, forcing firms to curtail business when they cannot substitute their constrained business partners. “Monetary policy bottlenecks” amplify the impact of monetary policy beyond the standard balance sheet channel of transmission.
Keywords
Monetary policy transmission
supply chain
financial constraints
HSG Classification
contribution to scientific community
Refereed
Yes
Pages
49
Division(s)
File(s)![Thumbnail Image]()
open.access
Name
MP_JFI_final-1.pdf
Type
Main Article
Size
1.43 MB
Format
Adobe PDF
Checksum (MD5)
5e1ec4c8c5d971a7f13227a8550edd52