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

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

with Donghai Zhang
[Latest Draft] [SSRN Working Paper]

We document three pieces of evidence about the investment channel of monetary policy. First, an interest rate cut reshapes the distribution of investment rates as it leads to fewer small or zero investment rates and more large investment rates. Second, the change in the distribution is more pronounced among young than old firms. We emphasize the relevance of the extensive margin—firms deciding whether to invest or not—in explaining these findings. Third, a decomposition exercise indicates that the extensive margin accounts for around 50% of the effect of monetary policy on the average investment rate and more than 50% of the heterogeneous effect on young firms. To interpret these empirical findings, we build a heterogeneous-firm model with fixed adjustment costs and firm life-cycle dynamics. In the model, young (small) firms—often standing in for financially constrained firms—are more sensitive to monetary policy even without a financial accelerator mechanism. 

[Latest Draft]

Crises affect firms unequally. For example, natural disasters disrupt only those firms that are located in a specific region. The current paper studies the aggregate effects of shocks to a subset of firms in many industries – referred to as asymmetric supply shocks. Based on a model with oligopolistic competition and firm heterogeneity, the paper shows that an economy with a lower intensity of competition among firms is less resilient to asymmetric supply shocks. The reason is the behavior of unharmed firms which face a higher demand for their goods. With more market power, these firms find it optimal to respond by raising prices more and expanding production less. Therefore, the volatility of both output and markups is higher when the economy is less competitive. The main mechanism is supported by evidence from firm-level as well as time-series data: Higher markups are associated with a higher volatility.

Policy Writings

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