Working Paper: CEPR ID: DP17280
Authors: Niklas Grimm; Luc Laeven; Alexander Popov
Abstract: We document a strong and heterogeneous response of corporate R&D investment to changes in debt financing conditions induced by corporate debt purchases under the ECB's QE Program. Companies eligible for the program increase significantly their investment in R&D, relative to similar ineligible companies operating in the same country and sector. This effect is limited to firms with low leverage and with high levels of prior innovation. In contrast, QE-eligible companies with no history of innovation only increase dividend payments. Finally, credit constraints do not appear to matter for the response of R&D investment to QE.
Keywords: corporate innovation; real effects; unconventional monetary policy; asset purchases
JEL Codes: E5; G10; O3
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| ECB's CSPP (E58) | increase in corporate R&D investment among eligible firms (O39) |
| eligible firms (L20) | increase in corporate R&D investment (O39) |
| CSPP (C87) | reduce funding costs (G32) |
| low leverage and high prior innovation levels (O39) | increase in R&D investment (O39) |
| no prior innovation history (O36) | increase in dividend payments instead of R&D investments (G35) |
| credit constraints (E51) | response of R&D investment to the CSPP (O39) |