| Author(s): |
Martina Jašová , Caterina Mendicino, Dominik Supera
|
| Type: |
Articles in journals with impact factor |
| Year: |
2021 |
| Number: |
118 |
| ISSN / ISBN: |
|
| Published in: |
Journal of Monetary Economics |
| Publishing place: |
|
| Keywords: |
Bank credit, Central bank commitment, Real effects |
| JEL codes: |
E44, E52, E58, G21, G32 |
| Suggested Citation: |
Jasova M., Mendicino C., Supera D. (2021) Policy uncertainty, lender of last resort and the real economy, Journal of Monetary Economics 118: 381-398 |
| Abstract: |
A reduction in lender of last resort (LOLR) policy uncertainty positively affects bank lending and propagates to investment and employment. We exploit a unique policy that reduced uncertainty regarding the availability of future LOLR funding for banks as a quasi-natural experiment. Using micro-level data on banks, firms and loans in Portugal, we generate cross-sectional variation in banks’ exposure to uncertainty and find that the size of the haircut subsidy - the gap between private market and central bank security valuations - plays a key role in the propagation of the shock to lending and the real economy. |
