Monetary policy and potential output growth Can monetary policy affect potential output growth? And if yes, how is this consistent with the neoclassical thesis's of money neutrality in the long run?
Can monetary policy affect potential output growth?


Yes. Otherwise, central banks would be indifferent to quantitative easing and other measures.


  how is this consistent with the neoclassical thesis's of money neutrality in the long run?


It is not. The premise that "new money neither creates nor destroys machines" sounds accurate only in isolation. But in the real world, companies bind themselves to financial (as well as fiscal) obligations which are in terms of nominal variables.

Certain monetary policies may render those companies cash-strapped, thereby triggering liquidity crises, bankruptcies, higher cost of financing, emigration of skilled workforce, and other effects. Altogether, this may result in structural changes in the economy.

Thus, while the thesis assumes that the aggregate supply curve is vertical, it misses the logical notion that this curve may shift to the left or to the right in the long run.