Monetary policy transmission mechanisms and the impact of a devaluation at the firm level

This final report begins with a theoretical review of the transmission mechanisms of macroeconomic shocks and the various methodologies that have been used in both domestic and international literature to identify and measure the importance of the balance sheet channel. Subsequently, it examines the existence and relevance of the balance sheet transmission channel in the national economy. To this end, it reviews the general characteristics of the Peruvian financial system and the stylized facts observed at both the macroeconomic and firm levels, with special emphasis on the period of greatest impact from international crises. Regarding the latter aspect, the analysis begins with an examination of the financial statements of a sample of 2,054 firms from the main sectors of the national economy. This preliminary evidence regarding the possible existence of a balance sheet channel is then corroborated through an econometric analysis of the data from the sample of firms, using panel data estimation (both static and dynamic). The results of this study suggest the existence of the balance sheet channel in the Peruvian economy at the level of non-financial firms, through real exchange rate depreciation and primary issuance. (Audio: Department of Economic Publications)