New Keynesian Monetary Policy Via Technical Adjustments in an Ample-Reserves Environment

I develop a new Keynesian model in which the central bank manages an overnight reverse repo facility, provides collateralized lending through a discount window facility, and can independently affect the quantity of reserves and the level of interest rates. Three different sets of policy rules are tested in simulation exercises. I show that rules which actively manage the interest rates of the standing facilities provide superior stabilization results over a rule which directly targets the interbank rate as in the standard new Keynesian model