Matthias Gnewuch

Welcome! I am an Economist at the European Stability Mechanism, and hold a Ph.D. in Economics from the Bonn Graduate School of Economics. My research interests are Macroeconomics, Monetary Policy, and Firm Heterogeneity.

You can find my CV here and contact me at matthias.gnewuch [at] gmail [dot] com.

This is my personal website. All views expressed are my own and do not necessarily reflect those of the European Stability Mechanism.


European Economic Review, Vol. 145, June 2022
[Published Version]   [Working Paper Version]   [Data: Asset Purchase News (Updated: April 2024)

This paper proposes an identification strategy for news about sovereign debt-based asset purchases. It measures sovereign yield changes that are unrelated to movements in risk-free interest rates or risk premiums. Around ECB announcements, these reflect the anticipation of shifts in the effective supply of government debt, caused by central bank purchases. This paper documents that asset purchase news about government bonds have substantial spillovers to corporate bond and stock markets, within and beyond the euro area. Spillovers are unequal across euro-area countries, as stock prices rise most in low-risk countries with very large firms. In contrast, sovereign yields fall homogeneously.

Working Papers

R&R at the Journal of Monetary Economics
with Donghai Zhang (Updated: January 2024)
[Latest Draft] [SSRN Working Paper (2022)]

We document that an interest rate cut reshapes the cross-sectional distribution of investment rates—fewer zeros and small rates and more large rates—and particularly so among young firms. We emphasize the relevance of the extensive margin investment decision—whether to invest or not—in explaining these findings. A decomposition reveals that the extensive margin contributes around 50% to monetary policy’s effect on the average investment rate and over 50% to the heterogeneous effect on young firms. To rationalize these findings and study their aggregate implications, we develop a heterogeneous-firm model with fixed adjustment costs and firm life-cycle dynamics.

 (Updated: January 2024)
[Latest Draft] [JMP Version (November 2022)]

Crises affect firms unequally. For example, natural disasters disrupt only those firms that are located in specific regions. Financial crises particularly impact those firms that require external financing. This paper studies the aggregate effects of shocks that affect a subset of firms in many industries—referred to as asymmetric supply shocks. Based on a heterogeneous-firm model with oligopolistic competition, calibrated to firm-level data, I show two main results. First, asymmetric supply shocks can account for a quarter of fluctuations in aggregate output. Second, a higher intensity of competition among firms makes aggregate output higher on average, but also more volatile over time. The reason is that intense competition, by curtailing firms’ market power, fosters the reallocation of inputs from less productive to more productive firms in the face of asymmetric supply shocks.

Work in Progress

Lumpy Loan Rates, Heterogeneous Banks, and the Transmission of Monetary Policy (with Donghai Zhang)

Debt Supply, Convenience Yields, and Spillovers across the Euro Area (with Cristian Arcidiacono & Matthieu Bellon) 

Policy Writings

Building resilience in times of inflation-induced inequality, with Matthieu Bellon. ESM blog article, August 2023.