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The costs and benefits of liquidity regulations : lessons from an idle monetary policy tool
Curfman, Christopher J.; Kandrac, John - 2019
We investigate how liquidity regulations affect banks by examining a dormant monetary policy tool that functions as a … credit supply. Liquidity requirements also depress banks' profitability, though some of the regulatory costs are passed on to … liability holders. We document a prudential benefit of liquidity requirements by showing that banks subject to a higher …
Persistent link: https://www.econbiz.de/10012181216
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Understanding bank and nonbank credit cycles : a structural exploration
Durdu, Ceyhun Bora; Zhong, Molin - 2019
We explore the structural drivers of bank and nonbank credit cycles using an estimated medium-scale macro model that allows for bank and nonbank financial intermediation. We posit economy-wide aggregate and sectoral disturbances to potentially drive bank and nonbank credit growth. We find that...
Persistent link: https://www.econbiz.de/10012181042
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Money, Reserves, and the Transmission of Monetary Policy : Does the Money Multiplier Exist?
Carpenter, Seth B. - 2011
With the use of nontraditional policy tools, the level of reserve balances has risen significantly in the United States since 2007. Before the financial crisis, reserve balances were roughly $20 billion whereas the level has risen well past $1 trillion. The effect of reserve balances in simple...
Persistent link: https://www.econbiz.de/10013122094
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Friedman's Monetary Economics in Practice
Nelson, Edward - 2011
This paper views the policy response to the recent financial crisis from the perspective of Milton Friedman's monetary economics. Five major aspects of the policy response are: 1) discount window lending has been provided broadly to the financial system, at rates low relative to the market rates...
Persistent link: https://www.econbiz.de/10013124914
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Misallocation Costs of Digging Deeper into the Central Bank Toolkit
Kurtzman, Robert J. - 2019
Central bank large-scale asset purchases, such as the purchase of securities of nonfinancial firms, can induce a misallocation of resources through their heterogeneous effect on firm cost of capital. First, we analytically demonstrate the mechanism in a two-period model. We then evaluate the...
Persistent link: https://www.econbiz.de/10012901030
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Reaffirming the influence of Milton Friedman on U.K. economic policy
Nelson, Edward - 2017
This paper finds a significant influence of Milton Friedman on U.K. economic policy from the 1970s onward, and especially during the period of the Thatcher Government. The finding is based on a consideration of statements by policymakers and key economic advisers, as well as an analysis of...
Persistent link: https://www.econbiz.de/10011803172
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The continuing validity of monetary policy autonomy under floating exchange rates
Nelson, Edward - 2017
Economic research in recent years has given considerable prominence to the issue of whether a floating exchange rate provides autonomy with regard to monetary policy to a central bank whose economy is highly open. In particular, Rey (2016) has argued that inflation-targeting advanced economies...
Persistent link: https://www.econbiz.de/10011803325
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Voluntary reserve targets
Baughman, Garth; Carapella, Francesca - 2018
This paper updates the standard workhorse model of banks' reserve management to include frictions inherent to money … rates. In addition to this characterization, we consider (i) the impact of routine and non-routine liquidity injections by …
Persistent link: https://www.econbiz.de/10011932184
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Assessing the Effects of the Zero-Interest-Rate Policy Through the Lens of a Regime-Switching DSGE Model
Chen, Han - 2014
Standard dynamic stochastic general equilibrium (DSGE) models assume a Taylor rule and forecast an increase in interest rates immediately after the 2007-2009 economic recession given the predicted output and inflation, contradictory to the extended period of near-zero interest rate policy (ZIRP)...
Persistent link: https://www.econbiz.de/10013052892
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The Risk Channel of Monetary Policy
de Groot, Oliver - 2014
and a banking sector that can issue both outside equity and debt, making banks' exposure to risk an endogenous choice, and … dependent on the (monetary) policy environment. Banks' equilibrium portfolio choice is determined by solving the model around a … risk-adjusted steady state. I find that banks reduce their reliance on debt finance and decrease leverage when monetary …
Persistent link: https://www.econbiz.de/10013054300