We present a sticky-wage model with two types of labors: while worker's labor contributes to current production, researcherís work helps develop new ideas to add to firm's knowledge capital that enhances its productivity for many periods. The long-lived effect of knowledge capital on...

This paper examines the influence of financial constraints on the transmission of monetary policy shocks across heterogeneous firms. To this end, we develop a Dynamic Stochastic General Equilibrium (DSGE) model incorporating firm heterogeneity, nominal rigidity, and financial frictions....

This study provides new insights on the allocative effect of monetary policy. It shows that contractionary monetary policy exerts an important reallocation effect by cleansing unproductive firms and enhancing aggregate productivity. At the same time, however, reallocation involves a reduction in...

This paper revisits the case for flexible vs. fixed exchange rate regime in a two-country model with firm heterogeneity and nominal wage rigidity under incomplete financial markets. Dampening nominal exchange rate fluctuations simultaneously stabilizes the firm turnover in the export market....