We consider a monetary growth model in which banks arise to provide liquidity. In addition, there is a government that issues not only money, but interest-bearing bonds; these bonds compete with capital in private portfolios. When the government fixes a constant growth rate for the money stock,...

The paper explores the relationship between financial stability, deflation, and monetary policy. A discussion of narrow liquidity, broad liquidity, market liquidity, and financial distress provides the foundation for the analysis. There are two preliminary conclusions. Equity prices are a...

The paper proposes three options for overcoming the zero bound on interest rate policy: a carry tax on money, open market operations in long bonds, and monetary transfers. A variable carry tax on electronic bank reserves could enable a central bank to target negative nominal interest rates. A...

This paper provides a detailed examination of various money stock control procedures in a rational expectations environment. The analysis investigates the relative efficiency of controlling monetary aggregate through the use of an interest rate instrument or through various reserve measures...

Recently there has been renewed interest in using general equilibrium models to understand the effects of monetary policy on interest rates and real economic activity. This research effort involved the search for models that will account for the liquidity effects--the decrease in short-term...

This paper presents a simple general equilibrium model of the commercial loan market in which liquidity constraints arise endogenously because of imperfect information and imperfect competition. The information and market structure generate a discriminatory interest rate schedule and loan size...

As a substitute for Regulation Q ceilings, Regulation D may be used to control the volume of bank credit stemming from issuance of large denomination, negotiable certificates of deposit.

Of the many studies analyzing the Federal Reserve's post-October 6, 1979 nonborrowed reserve (NBR) operating procedure, none has focused upon weekly money market dynamics under rational expectations. This paper employs the rational expectations assumption in an explicit institutional model of...

Laws requiring banks to hold a volume of reserves equal to a prescribed fraction of their deposits originated in this country more than a century ago. Since then both the financial system and the rationales supporting reserve requirements have changed considerably. Nevertheless, the practice of...

Increasing membership attrition has stimulated research into the costs and benefits of Federal Reserve System membership compared to the nonmembership alternative. Recent research has contributed to our understanding of the membership question in two important ways.