arbiter
JournalsAccount

How monetary policy and institutions shape R&D: a dynamic general equilibrium approach

Óscar Afonso

Economic Change and Restructuring2026https://doi.org/10.1007/s10644-026-09965-9article
AJG 1ABDC B
Weight
0.50

Abstract

This paper examines how monetary policy and institutional quality jointly affect innovation and long-term economic growth. We develop a dynamic general equilibrium model in which firms allocate resources to R&D, influenced by interest rates, inflation, and institutional efficiency. The model shows that lower interest rates and stable prices encourage R&D by improving liquidity and reducing financing costs, but their impact is significantly enhanced when institutions are strong and governance is effective. Numerical simulations reveal that weak institutions and inflationary environments hinder R&D and growth, while sound monetary policy and institutional reforms reinforce each other. By highlighting these interactions, the paper offers practical insights for policymakers seeking to promote sustainable, innovation-led development. Our findings emphasize the importance of aligning monetary tools with institutional improvements to maximize long-term growth outcomes.

Open via your library →

Cite this paper

https://doi.org/https://doi.org/10.1007/s10644-026-09965-9

Or copy a formatted citation

@article{óscar2026,
  title        = {{How monetary policy and institutions shape R&D: a dynamic general equilibrium approach}},
  author       = {Óscar Afonso},
  journal      = {Economic Change and Restructuring},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1007/s10644-026-09965-9},
}

Paste directly into BibTeX, Zotero, or your reference manager.

Flag this paper

How monetary policy and institutions shape R&D: a dynamic general equilibrium approach

Flags are reviewed by the Arbiter methodology team within 5 business days.

Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.