PhD thesis defence by Sotirios Georgousis
This thesis is composed of three essays in monetary economics, trade, and firm dynamics. The first and second chapters contribute to the field of monetary economics and trade. The third chapter focuses on the heterogeneous effects of conventional and unconventional monetary policy on the investment of the firms across the euro area.
In the first chapter, 'Firm Heterogeneity, Price Discrimination, and Monetary Policy Transmission in the Euro Area: Evidence from French Exporters', I provide empirical evidence of a novel mechanism of heterogeneous monetary policy transmission in the euro area triggered by monetary policy. By using French customs data, I explore a dynamic price discrimination mechanism of the French exporters towards the euro area destinations. I find that the destinations firms productivity distributions can explain partly this mechanism signaling a destination specific mechanism that leads to changes in the elasticity of demand in each destination. The mechanism I use to explain this is the selection mechanism as it is introduced in the Trade theory. Monetary policy shocks lead to a higher movement in the cut-off productivity at the more concentrated markets leading to changes in the domestic competition.
The second chapter, 'Firm Productivity Distributions, Trade, and the Heterogeneous Transmission of Monetary Policy', replicates the empirical evidence from the first chapter through a two country monetary union model that integrates the Melitz-Ottaviano model in a New Keynesian framework with imperfect risk-sharing. The use of the quasi-linear preferences allow endogenous and heterogeneous markups. A monetary policy shock triggers the selection mechanism through a decrease in the demand of the households. Different skewness in the firms’ productivity distributions lead to an heterogeneous magnitude of the selection effect. As a result, the elasticity of demand will move in a different way across the destinations.
The third chapter, 'Monetary Policy, Investment, and Market Stabilization' , co-authored with Luis Fonseca, John Hutchinson and Arthur Saint Guilhem, studies the heterogeneous effect of the common conventional and unconventional monetary policy to the investment rate of firms in Germany, Italy, Spain, and France. Moreover, we use a novel measure of unconventional monetary policy that affects the spreads of Core and Periphery showing that there is a market-stabilisation effect in the investment rate.