View metadata

dc.titleMonetary Policy Effects on Firms’ Uncertainty
dc.contributor.authorLópez-Noria, Gabriela
dc.contributor.authorPedemonte, Mathieu
dc.contributor.orgunitDepartment of Research and Chief Economist
dc.coverageMexico
dc.date.available2025-07-16T00:07:00
dc.date.issue2025-07-16T00:07:00
dc.description.abstractWe study how monetary policy affects inflation uncertainty. Using a survey of Mexican firms and exploiting quasi-random variation in the response date, we estimate the effect of a monetary policy decision and surprise on firms perceived inflation uncertainty. We find that a one percentage point contractionary monetary policy reduces inflation uncertainty by 0.02 percentage points. We explore how this result is affected by levels of higher and lower aggregate uncertainty. We find that monetary policy tightening is twice as effective in reducing inflation uncertainty in periods of higher economic uncertainty, such as trade uncertainty. Our findings highlight the role of monetary policy in reducing inflation uncertainty. We discuss that in periods of uncertainty, monetary authorities face a trade-off between stimulating the economy and increasing uncertainty about the inflation outlook.
dc.format.extent24
dc.identifier.doihttp://dx.doi.org/10.18235/0013615
dc.identifier.urlhttps://publications.iadb.org/publications/english/document/Monetary-Policy-Effects-on-Firms-Uncertainty.pdf
dc.language.isoen
dc.publisherInter-American Development Bank
dc.subjectMonetary Policy
dc.subjectSmall Business
dc.subjectStandard Deviation
dc.subjectIntegration and Trade
dc.subjectInflation
dc.subject.jelcodeE31 - Price Level • Inflation • Deflation
dc.subject.jelcodeE52 - Monetary Policy
dc.subject.jelcodeD80 - Information, Knowledge, and Uncertainty: General
dc.subject.jelcodeD84 - Expectations • Speculations
dc.subject.keywordssurvey data;inflation uncertainty;firms expectations
dc.typeWorking Papers
idb.identifier.pubnumberIDB-WP-01732
idb.operationRG-K1098
Return to Publication