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An implicit rationale for a bank reserve requirement is that a central monetary authority is in a unique position (as quot;social planner) to impose a quot;socially superiorquot; outcome to that yielded by a free banking system. We illustrate how this can be true in the context of a simple...
Persistent link: https://www.econbiz.de/10012788064
implement a case-study on the response of banks in France, Germany, Italy and Spain to a monetary tightening. The episode we …
Persistent link: https://www.econbiz.de/10013235277
Today, all major central banks pay or collect interest on reserves, and stand ready to use the interest rate as an instrument of monetary policy. We show that by paying an appropriate rate on reserves, the central bank can pin the price level uniquely to a target. The essential idea is to index...
Persistent link: https://www.econbiz.de/10012980673
First, we show that the interest rate on Federal funds is extremely informative about future movements of real macroeconomic variables, more so than monetary aggregates or other interest rates. Next, we argue that the reason for this forecasting is that the funds rate sensitively records shocks...
Persistent link: https://www.econbiz.de/10013219705
The response of interest rates to money announcement surprises is examined both theoretically and empirically in this paper. In the theoretical models developed, not only changes in operating procedures, but also reserve requirement systems, are found to potentially affect the response....
Persistent link: https://www.econbiz.de/10013223601
While many analyses of monetary policy consider only a target for a short-term nominal interest rate, other dimensions of policy have recently been of greater importance: changes in the supply of bank reserves, changes in the assets acquired by central banks, and changes in the interest rate...
Persistent link: https://www.econbiz.de/10013139902
We analyze the macroeconomic effects of macroprudential policy – in the form of legal reserve requirements – in three Latin American countries (Argentina, Brazil, and Uruguay). To correctly identify innovations in changes in legal reserve requirements, we develop a narrative approach –...
Persistent link: https://www.econbiz.de/10013299371
Affirmative action policies are often implemented through reserve systems. In this study, we demonstrate that reserve systems face widespread misunderstanding by the public. This misunderstanding can lead individuals to support policies that ineffectively pursue their interests. To establish...
Persistent link: https://www.econbiz.de/10013310185
In 1936-37, the Federal Reserve doubled the reserve requirements imposed on member banks. Ever since, the question of whether the doubling of reserve requirements increased reserve demand and produced a contraction of money and credit, and thereby helped to cause the recession of 1937-1938, has...
Persistent link: https://www.econbiz.de/10013131502
I analyze monetary policy with interest on reserves and a large balance sheet. I show that conventional theories do not determine inflation in this regime, so I base the analysis on the fiscal theory of the price level. I find that monetary policy can peg the nominal rate, and determine expected...
Persistent link: https://www.econbiz.de/10013044987