BoE study justifies interest-rate cuts
A paper published by the Bank of England in March looks into a new aspect of the transmission mechanism linked to a reallocation of resources and measures the trade-off between inflation variability and output variability in the short term.
The paper develops a model for monetary policy analysis in heterogeneous markets with sticky prices. The model measures the impact of monetary policy on high productivity firms and low productivity firms. According to the paper, credit market imperfections
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