Monetary Policy and Local Industry Structure

Alexander A. Popov, Lea Steininger

Publication: Working/Discussion PaperWU Working Paper

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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).
Original languageEnglish
PublisherWU Vienna University of Economics and Business
Publication statusPublished - Feb 2023

Publication series

SeriesDepartment of Economics Working Paper Series

WU Working Paper Series

  • Department of Economics Working Paper Series


  • Eurozone
  • Monetary Union
  • Monetary Policy
  • Low Interest Rates
  • Competition

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