This paper explores how fiscal and monetary policy interact if commitment and access to lump-sum taxation are limited. We analyze how equilibrium outcomes for inflation, employment, and public spending are affected by the structural features of an economy, such as money holdings, outstanding...

How does firm dynamically adjust its capital and debt structure in response to interest rate risk? Using micro-data, I find that bond spread increases more than loan spread and firms rebalance towards bank loans and away from corporate bonds in response to unexpected monetary tightening. I...

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...