We develop a new tractable model of banks' liquidity management and the credit channel of monetary policy. Banks … reserves. Deposit withdrawals are random, and banks manage liquidity risk by holding a precautionary buffer of reserves. We … greater liquidity risk. Through various tools, monetary policy affects the real economy by altering that trade-off. In a …

differ in pledgability - the extent to which they can be used to secure loans - and hence liquidity. Although many previous …-pricing theory, is calibrated to analyze the effects of monetary policy and financial innovation. We show that inflation can raise …

provided by the uniform squeeze in liquidity, which affected all banks in our sample. We study the first link in the … liquidity …

the international liquidity management aspect of sterilization over the traditional monetary one, a re-focus that seems … liquidity management issues more generally …

liquidity effects. This paper discusses the basic frictions and mechanisms underlying this new class of models and investigates … long-lasting, quantitatively significant liquidity effects, as well as persistent increases in aggregate economic activity …

foreign affiliates to help smooth domestic liquidity shocks. We also show that the existence of such internal capital markets … contributes to an international propagation of domestic liquidity shocks to lending by affiliated banks abroad. While these …

The 'credit channel' theory of monetary policy transmission holds that informational frictions in credit markets worsen … credit aggregates are not valid tests of this theory …