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 …

capitalistic economy. These cycles, inherent to the rise of innovation, are an unavoidable consequence of the way in which markets … played by finance in fostering innovation, in defining bank credit as the “monetary complement” of innovation. Nevertheless …, we feel that the connection between innovation and firm financing has seldom been examined from a theoretical standpoint …

total factor productivity (TFP) is endogenous and depends on the resource allocation. The model uncovers a novel tradeoff …