We provide evidence that tighter monetary shocks reduce allocative efficiency, however, the effect of these shocks differs by firm characteristics such as markup, size, and age of firms. To identify the effect of these shocks, we use the Structural Vector Autoregressive (SVAR) model and the...

In this paper we set up a New-Keynesian model with a heterogenous banking sector to analyze liquidity problems on the interbank market. The presence of an interbank market is essential to consider a situation where an increased liquidity supply by the central bank is only partially passed on to...