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Banks, Liquidity Management, and Monetary Policy

Bianchi, Javier; Bigio, Saki - Federal Reserve Bank of Minneapolis - 2014

random and therefore create liquidity risk, which in turn determines the supply of credit and the money multiplier. We study … profiting from lending and incurring greater liquidity risk. We calibrate our model to study quantitatively why banks have …

Persistent link: https://www.econbiz.de/10010892298

Optimal fiscal and monetary policy: some recent results

Chari, V. V.; Christiano, Lawrence J.; Kehoe, Patrick J. - Federal Reserve Bank of Minneapolis - 1991

This paper studies the quantitative properties of fiscal and monetary policy in business cycle models. In terms of fiscal policy, optimal labor tax rates are virtually constant and optimal capital income tax rates are close to zero on average. In terms of monetary policy, the Friedman rule is...

Persistent link: https://www.econbiz.de/10005498465

The time consistency of monetary and fiscal policies

Alvarez, Fernando; Kehoe, Patrick J.; Neumeyer, Pablo - Federal Reserve Bank of Minneapolis - 2002

Are optimal monetary and fiscal policies time consistent in a monetary economy? Yes, but if and only if under commitment the Friedman rule of setting nominal interest rates to zero is optimal. This result is of applied interest because the Friedman rule is optimal for the standard preferences...

Persistent link: https://www.econbiz.de/10005427782

Tax distortions in a neoclassical monetary economy

Cooley, Thomas F.; Hansen, Gary D. - Federal Reserve Bank of Minneapolis - 1991

In this paper we use the common perspective provided by the neoclassical growth model to evaluate the size of the distortions associated with different monetary and fiscal policies designed to finance a given sequence of government expenditures. We construct an artificial monetary economy...

Persistent link: https://www.econbiz.de/10005372825

Maturity shortening and market failure

Thierfelder, Felix - Deutsche Bundesbank - 2012

Motivated by the financial crisis of 2007-2009 several papers have provided explanations for why liquidity may dry up … during market stress. This paper also looks at this issue but focuses on the question as to why the liquidity crunch was not … need to provide longer-term liquidity. The paper asks what market failure central banks were addressing by intervening and …

Persistent link: https://www.econbiz.de/10010957159

Maturity shortening and market failure

Thierfelder, Felix - Deutsche Bundesbank - 2012

Persistent link: https://www.econbiz.de/10010535438

Inflation and money growth under alternative monetary standards

Rolnick, Arthur J.; Weber, Warren E. - Federal Reserve Bank of Minneapolis - 1994

Persistent link: https://www.econbiz.de/10005526369

Monetary targeting in a dynamic macro model

Roberds, William - Federal Reserve Bank of Minneapolis - 1987

The consequences of a straightforward monetary targeting scheme are examined for a simple dynamic macro model. The notion of “targeting” used is the strategic one introduced by Rogoff (1985). Numerical calculations are used to demonstrate that for the model under consideration, monetary...

Persistent link: https://www.econbiz.de/10005498480

Optimality of the Friedman rule in economies with distorting taxes

Chari, V.V.; Christiano, Lawrence J.; Kehoe, Patrick J. - Federal Reserve Bank of Minneapolis - 1993

We find conditions for the Friedman rule to be optimal in three standard models of money. These conditions are homotheticity and separability assumptions on preferences similar to those in the public finance literature on optimal uniform commodity taxation. We show that there is no connection...

Persistent link: https://www.econbiz.de/10005498554

Some explorations into optimal cyclical monetary policy

Aiyagari, S. Rao; Braun, R. Anton - Federal Reserve Bank of Minneapolis - 1996

. The first is a pure liquidity effect model, the second is a cost of changing prices model, and the third is an optimal …

Persistent link: https://www.econbiz.de/10005427706