minimize the length and severity of the recession, would require a stronger commitment to low interest rates for an extended …

This paper assumes that a central bank commits itself to maintaining an inflation target and then asks what measure of … the inflation rate the central bank should use if it wants to maximize economic stability. The paper first formalizes this … that a central bank that wants to achieve maximum stability of economic activity should use a price index that gives …

style of central banking affects central banks' solvency. A central bank is insolvent if its requirement to pay dividends to … Bank), and exchange-rate risk (central banks of small open economies). We find that a central bank that pays dividends … circumstances, the dividend will be negative, meaning that the government is making a payment to the bank. If the charter does not …

What set of institutions can support the activity of a central bank? Designing a central bank requires specifying its … objective function, including the bank's mandate at different horizons and the choice of banker(s), specifying the resource … constraint that limits the resources that the central bank generates, the assets it holds, or the payments on its liabilities …

In spite of the mystique behind a central bank's balance sheet, its resource constraint bounds the dividends it can … multiple equilibria arise if debt repudiation lowers fiscal surpluses, the central bank may help to select one equilibrium. The … central bank's main lever over fundamentals is to raise inflation, but otherwise the balance sheet gives it little leeway …

the ability of the central bank to alleviate the fiscal burden by influencing different terms in the government resource … seignorage is generated and subject to what constraints, (iii) whether central bank liabilities should count as public debt, (iv …) how central bank assets create income risk, and whether or not this threatens its solvency, and (v) how the central bank …

instrument of monetary policy. We show that by paying an appropriate rate on reserves, the central bank can pin the price level …

via contractions in credit and disruption in financial markets. Managing the size and composition of the central bank …