TY - JOUR T1 - Monetary transmission under competing corporate finance regimes JO - Ensayos sobre Política Económica T2 - AU - Grauwe,Paul De AU - Gerba,Eddie SN - 01204483 M3 - 10.1016/j.espe.2016.11.002 DO - 10.1016/j.espe.2016.11.002 UR - https://www.elsevier.es/es-revista-ensayos-sobre-politica-economica-387-articulo-monetary-transmission-under-competing-corporate-S0120448317300027 AB - The behavioral agent-based framework of De Grauwe and Gerba (2015) is extended to allow for a counterfactual exercise on the role of corporate finance arrangements for monetary transmission. Two alternative firm financial frictions are independently introduced: market-based and bank-based. We find convincing evidence that the overall monetary transmission channel is stronger in the bank-based system compared to the market-based. While the growth in credit is larger in the market-based system, uncertainty originated from imperfect beliefs produce impulse responses in macroeconomic variables that are, on average, half of those in the bank-based model. At the same time we find mixed results on the conditional effectiveness of monetary policy to offset contractions. Conditional on being in a recession, a monetary expansion in a market-based system creates higher successive booms. That said, a monetary easing in the bank-based system is more effective in smoothening the financial-and business cycles. ER -