Утро скучной экономики

Ставка против венчура и инноваций, и рынок трежерис

A 100bp tightening shock lowers R&D investment in the national accounts by about 1% over two years.

a 100bp monetary policy shock lowers venture capital investment by 25% 1-3 years after the shock and patenting in important technologies as classified by Bloom et al. (2023) by 9% 2-4 years after the shock.

Monetary policy affects innovation through both aggregate demand and financial conditions. Patenting by firms in industries that are more sensitive to aggregate demand declines by more in response to monetary policy tightening than patenting in other industries, and that the excess bond premium — the component of credit spreads unrelated to expected credit loses — typically rises by around 10bp for a 100bp monetary policy shock.

— Ma and Zimmermann (2023) research document

Treasury market has become less resilient over the last few decades because the size of the balance sheets of primary dealers — the intermediaries in the US Treasury market — has not kept up with the size of the overall market.

Dealer balance sheet constraints significantly hamper market functioning when dealer capacity utilization rises above roughly 40%, which happened in the early weeks of the pandemic in March 2020.

Treasury market is likely to remain fragile, as large budget deficits and limited flexibility on dealer balance sheets persist.

— Duffie (2023) research document