In the past decades, the importance of different capital goods has gradually changed, which has led to a structural shift in the composition of the demand for capital at the expense of more traditional capital inputs such as machinery and equipment. In this paper, we focus on a novel driver of...

"This article provides a quantitative assessment of the role of financial frictions in the choice of exchange rate regimes. I use a two-country model with sticky prices to compare different exchange rate arrangements. I simulate the model without and with borrowing constraints on investment,...