We propose a new framework for monetary policy analysis to study monetary policy normalization when exiting a liquidity … trap. The optimal combination of reserves and interest rate policy requires an increase in liquidity (reserves) a few … tightening starts before the liftoff of the policy rate. Moreover, the withdrawal of liquidity takes place at a very slow pace …

In this paper, we argue that the observed difference in the cost of intraday and overnight liquidity is part of an … optimal payments system design. In our environment, the interest charged on overnight liquidity affects output, while the cost … of intraday liquidity only affects the distribution of resources between money holders and non–money holders. The low …

Liquidity hoarding by banks and extreme volatility of the fed funds rate have been widely seen as severely disrupting … volatility. We develop a model with credit and liquidity frictions in the interbank market consistent with the empirical results … against liquidity shocks. Moreover, the intraday fed funds rate can spike above the discount rate and crash to near zero …

The Federal Home Loan Bank (FHLB) System is a large, complex, and understudied government-sponsored liquidity facility … about the respective roles of the various liquidity facilities would be helpful. …

particular, we do not find that worse performing banks began hoarding liquidity and indiscriminately reducing their lending. …

of liquidity into the banking system. The resulting increase in reserve balances exerted downward price pressure in the …