deposits, but those large deposits inflows took the form of "hot money" that changed its course when economic conditions …

We explore the connection between money, banks, and aggregate credit. We start with a simple real' model without money … then introduce money in this model. We show that if demand deposits are repayable in money rather than in goods, banks can …, reducing the real value of the deposits banks have to pay out. But demand deposits payable in money can expose the banks to new …

goals: 1) to explain why it is important to distinguish between the lending and "money" views of policy transmission; 2) to …