heterogeneous, aggregate investment is substantially less responsive to credit policy compared to an identical firm setting …I study the role of firm heterogeneity for the transmission of unconventional monetary policy in the form of "credit …. Moreover, when debt markets are segmented, credit policy directed exclusively at financially unconstrained firms is most …

their productivity and net worth and face collateral constraints that cause capital misallocation. TFP endogenously depends … equilibrium, general-equilibrium effects overturn this result: a monetary expansion increases the investment of high-productivity … on the time-varying distribution of firms. Although a reduction in real rates increases misallocation in partial …

This paper analyzes the link between monetary policy and capital misallocation in a New Keynesian model with … heterogeneous firms and financial frictions. In the model, firms with a high return to capital increase their investment more … strongly in response to a monetary policy expansion, thus reducing misallocation. This feature creates a new time …