Journal of Monetary Economics 2018 DOI: 10.1016/j.jmoneco.2017.10.006 View full text
Patrick Moran, Albert Queralto

Abstract: To what extent can monetary policy impact business innovation and productivity growth? We use a New Keynesian model with endogenous total factor productivity (TFP) to quantify the TFP losses due to the constraints on monetary policy imposed by the zero lower bound (ZLB) and the TFP benefits of tightening monetary policy more slowly than currently anticipated. In the model, monetary policy influences firms incentives to develop and implement innovations. We use evidence on the dynamic effects of R&D and monetar…

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