Tim Eisert

• Inflation and floating-rate loans: Evidence from the Euro Area

CEPR Working Paper, ECB Working Paper

Covered in: VoxEU, SUERF Policy Brief

(with Fabrizio Core, Filippo De Marco, and Glenn Schepens)

We show that floating-rate corporate debt weakens the transmission of monetary policy, as firms with floating-rate loans keep prices elevated after a rate hike to preserve cash flows. Using monthly data on product-level prices, industry-level inflation rates and the euro-area credit register from 2021 to 2023, we find that the short-run pass-through of monetary tightening to inflation is about 50% smaller in markets dominated by floating-rate loans. To address the selection of firms into floating-rate loans, we exploit within-product-type variation in demand conditions and instrument for floating-rate exposure using bank-side supply factors. The floating-rate effect is stronger when firms rely more on working capital and when competitors also borrow at floating rates, consistent with cost pass-through being feasible only when rivals face the same funding pressure. Firms more exposed to floating-rate loans increase mark-ups more during the tightening cycle, but also see higher funding costs. Overall, had firms across the euro area relied less on floating-rate loans, inflation would have been up to 0.8 percentage points lower in 2022--2023.

• How do supply shocks to inflation generalize? Evidence from the pandemic era in Europe 

being revised for second resubmission to the Review of Financial Studies

Covered in Financial Times, VoxEU

(with Viral V. Acharya, Matteo Crosignani, and Christian Eufinger)

We document how supply-chain pressures, household inflation expectations, and firm pricing power interacted to induce the pandemic-era surge in consumer price inflation in the euro area. Initially, supply-chain pressures increased inflation through a cost-push channel and raised inflation expectations. Subsequently, the cost-push channel intensified as firms with high pricing power increased product markups in sectors witnessing high demand.  Eventually, even though supply-chain pressures eased, these firms were able to further increase markups due to stickiness of inflation expectations. The resulting persistent impact on inflation suggests supply-side impulses can generalize, via an interaction of household expectations and firm pricing power, into broad-based inflation.

• Board Gender Quotas and Female Borrowing: Evidence from Loan-Level Data

(with Fabrizio Core, Angelo D'Andrea, and Daniel Urban)

CEPR Working Paper

We examine credit allocation following Italy's 2012 board-gender-quota reform. Combining Credit Registry data with information on firm ownership and financials, as well as administrative bank worker records, we document that female board representation in listed banks increases sharply after the reform. This change leads to higher credit growth and more first-time loan approvals for female-owned firms borrowing from these banks. The effects are supply-driven, concentrated among smaller firms, and mediated by an increase in the promotion of female employees to middle-management positions. We find no deterioration in credit quality but positive real effects for female-owned firms, suggesting a reduction in financial constraints.