Reallocation Effects of Monetary Policy

Miyakawa, Daisuke; Oikawa, Koki; Ueda, Kōzō

doi:10.2139/ssrn.3624690

Cited by 4 publications

(1 citation statement)

References 38 publications

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“…Whereas we show that the former lowers misallocation, Gopinath et al (2017) show that the latter increases misallocation through size-dependent financial frictions. Relatedly, Oikawa and Ueda (2018) study the long-run effects of nominal growth through reallocation across heterogeneous firms.…”

Section: Introductionmentioning

confidence: 99%

Monetary Policy, Markup Dispersion, and Aggregate TFP

Reinelt

Meier

2020

SSRN Journal

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We document three new empirical facts: (i) monetary policy shocks increase the markup dispersion across firms, (ii) they increase the relative markup of firms with stickier prices, and (iii) firms with stickier prices have higher markups. This is consistent with a New Keynesian model in which price rigidity is heterogeneous across firms.In the model, firms with more rigid prices optimally set higher markups and their markups increase by more after monetary policy shocks. The consequent increase in markup dispersion explains a negative aggregate TFP response. In a calibrated model, monetary policy shocks generate substantial fluctuations in aggregate productivity.

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Section: Introductionmentioning

confidence: 99%

Monetary Policy, Markup Dispersion, and Aggregate TFP

Reinelt

Meier

2020

SSRN Journal

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Inflation, innovation, and growth: A survey

Chu

2021

Bulletin of Econ Res

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In this survey, we provide a selective review of the literature on in ‡ation, innovation and economic growth. The relationship between economic growth and in ‡ation is a fundamental question in economics. Most studies in this literature explore this relationship in capital-based growth models. This survey reviews a recent branch of this literature on in ‡ation and innovation-driven growth. Specifically, we use a canonical monetary Schumpeterian growth model to demonstrate the e¤ects of in ‡ation on innovation and the macroeconomy via di¤erent channels. We …nd that the cash-in-advance constraints on consumption and R&D investment have drastically di¤erent implications on the macroeconomic e¤ects of in ‡ation.

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Reallocation Effects of Monetary Policy

Miyakawa

Oikawa

Ueda

2021

Int Economic Review

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Responding to the increased attention on the distributional aspects of monetary policy, we investigate the reallocation among heterogeneous firms triggered by nominal growth. Japanese firm-level data show that large firms invest more in R&D and grow faster than small firms under higher inflation. We then construct a model that introduces nominal rigidity into R&D-driven endogenous growth with heterogeneous firms. The model shows that high nominal growth leads to an increase in the market share of innovative firms because menu-cost burdens are relatively heavier for less innovative firms. This reallocation effect yields a positive effect of monetary expansion on both real growth and welfare. The optimal nominal growth can be strictly positive even under nominal rigidity. Moreover, the presence of menu costs can improve welfare.

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Reallocation Effects of Monetary Policy

Cited by 4 publications

References 38 publications

Monetary Policy, Markup Dispersion, and Aggregate TFP

Monetary Policy, Markup Dispersion, and Aggregate TFP

Inflation, innovation, and growth: A survey

Reallocation Effects of Monetary Policy

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