Abstract

In this paper I try to generalise the Greenwald-Stiglitz's framework with equity rationing introducing firms' financial heterogeneity as suggested by the hierarchy of finance model. After distinguishing among firms' alternative financing regimes it is possible to establish both a short run non-neutrality proposition according to which monetary policy may affect real output through changes of the expected future price level, and a long run non-neutrality proposition based on the Fisher effect. Moreover, changes in the degree of financial fragility of the system, proxied by changes in the proportion of liquidity constrained firms, may determine shifts of the dynamic behaviour of the system.