What question did this study set out to answer?

The goal is to understand how monetary policy influences economic growth through R&D and capital accumulation.

Effects of Monetary Policy in a Model With Cash‐in‐Advance Constraints on R&D and Capital Accumulation

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Model examines the impact of monetary policy on economic growth, indicating optimal interest rates for welfare and growth.

The goal is to understand how monetary policy influences economic growth through R&D and capital accumulation.
Developed an endogenous growth model incorporating cash-in-advance constraints.
Analyzed the relationship between economic growth and nominal interest rates.
Calibrated the model using U.S. economic data to evaluate interest rate levels for growth and welfare.
Found an inverted-U shape relationship between economic growth and nominal interest rates.
Identified that the welfare-maximizing nominal interest rate exceeds the growth-maximizing rate.
Quantified optimal interest rate levels for both growth and welfare.

Maeda et al. (2026) studied this question.

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