@article{a8cab703785047669d035d093c5d4b5f,
title = "REALLOCATION EFFECTS OF MONETARY POLICY",
abstract = "We 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 as 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, menu costs can improve welfare. Japanese firm-level data are consistent with the model implication in that under higher inflation, large firms grow faster than small firms.",
author = "Daisuke Miyakawa and Koki Oikawa and Kozo Ueda",
note = "Funding Information: We thank the editor, associate editor, three anonymous referees, Paul Beaudry, Guido Cozzi, Chris Edmond, Yuichi Furukawa, Kyoji Fukao, Giovanni Gallipoli, Hiro Kasahara, Rasmus Lentz, Makoto Yano, and seminar and conference participants at the CIGS, EEA‐ESEM, Research Institute of Economy, Trade and Industry (RIETI), SED, Singapore Economic Review Conference, the Macro Conference (Tokyo), University of British Columbia, University of Connecticut, University of Milan, University of Washington, and Waseda University. This study was conducted as a part of the “Microeconometric Analysis of Firm and Industry Growth” project, undertaken at the RIETI. Oikawa is grateful for financial support from the JSPS Grant‐in‐Aid (17K03635) and Inamori Foundation. Ueda is grateful for financial support from the JSPS Grant‐in‐Aid (16KK0065). All the errors are our own. Publisher Copyright: {\textcopyright} 2021 The Authors. International Economic Review published by Wiley Periodicals LLC on behalf of the Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association",
year = "2021",
doi = "10.1111/iere.12558",
language = "English",
journal = "International Economic Review",
issn = "0020-6598",
publisher = "Wiley-Blackwell",
}