The contribution presents and analyze the model with financialfrictions. It is tailor-made for the Czech economy, and thus contains severalfeatures for capturing Czech stylized facts (a cascade of nominal rigidities, highopenness, real exchange rate appreciation in consumer prices etc.). Linkages between real and financial sectors are incorporated via the state non-contingent debt-contracts within the financial accelerator. Also, the model contains shocks which hit financial variables and propagate through the model into real sectors. The empirical analysis is presented via results of the Bayesian estimation.