Hülsewig, Oliver (contributor) - 2004
), where (a) is the required
reserve ratio on deposits. The adding{up bank balance sheet constraint is
given by:
L+Bb +E = (1¡a … balance sheet adjustment.
17Graphically, the ambiguity arises because a contractionary monetary policy shifts both
11
Figure … balance sheet contractions are caused by shifts in
loan supply or loan demand" (Cecchetti, 1995, p. 92).25 Agreement has
been …