New Economics and Statistics Study Results Reported from Federal Reserve Board (Financial Constraints, Sectoral Heterogeneity, and the Cyclicality of Investment): Economics – Economics and Statistics

2025 DEC 18 (NewsRx) -- By a News Reporter-Staff News Editor at Economics Daily Report -- Investigators publish new report on Economics - Economics and Statistics. According to news reporting out of Washington, District of Columbia, by NewsRx editors, the research stated, “While investment in most sectors declines in response to a contractionary monetary policy shock, investment in the manufacturing sector increases.”

Our news journalists obtained a quote from the research from Federal Reserve Board, “Using manually digitized aggregate income and balance sheet data for the universe of US manufacturing firms, I show that this increase is driven by the types of firms which are least likely to be financially constrained. A two-sector New Keynesian model with financial frictions can match these facts; unconstrained firms take advantage of the decline in the user cost of capital caused by the monetary contraction, while constrained firms are forced to cut back.”

According to the news editors, the research concluded: “Removing firm financial constraints in the model dampens the response of manufacturing output to monetary shocks by about 25%.”

This research has been peer-reviewed.

For more information on this research see: Financial Constraints, Sectoral Heterogeneity, and the Cyclicality of Investment. Review of Economics and Statistics, 2025;107(6):1603-1619. Review of Economics and Statistics can be contacted at: Mit Press, One Rogers St, Cambridge, MA 02142-1209, USA.

Our news journalists report that additional information may be obtained by contacting Cooper Howes, Federal Reserve Board, Washington, DC 20004, United States.

The direct object identifier (DOI) for that additional information is: https://doi.org/10.1162/rest_a_01351. This DOI is a link to an online electronic document that is either free or for purchase, and can be your direct source for a journal article and its citation.

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