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Liquidity Dependence and the Waxing and Waning of Central Bank Balance Sheets

Acharya, Viral V.; Chauhan, Rahul Singh; Rajan, Raghuram G. - 2023

in 2017, there was no commensurate shrinkage of these claims on liquidity. Consequently, the financial sector was left … more sensitive to potential liquidity shocks, with weaker-capitalized banks most exposed. This necessitated Fed liquidity … provision in September 2019 and again in March 2020. Liquidity-risk-exposed banks suffered the most drawdowns and the largest …

Persistent link: https://www.econbiz.de/10014355833

Liquidity, Liquidity Everywhere, Not a Drop to Use : Why Flooding Banks with Central Bank Reserves May Not Expand Liquidity

Acharya, Viral V.; Rajan, Raghuram G. - 2022

reserve holdings. Normally, central bank balance sheet expansion will enhance the net future availability of liquidity to the … system. However, in episodes of stress when a large fraction of claims on liquidity are exercised, the demand for liquidity … may hoard reserves to bolster their own prospects, contributing significantly to liquidity shortages. Therefore, because …

Persistent link: https://www.econbiz.de/10013307630

Lessons from the Monetary and Fiscal History of Latin America

Esquivel, Carlos - 2019

Studying the modern economic histories of the ten largest countries in South America and Mexico teaches us the lack of fiscal discipline has been at the root of most of the region's macroeconomic instability. The lack of fiscal discipline, however, takes various forms not measured in the primary...

Persistent link: https://www.econbiz.de/10012890576

The Monetary and Fiscal History of Argentina : 1960-2017

Buera, Francisco J. - 2019

In this chapter, we review the monetary and fiscal history of Argentina for the period 1960–2017, a time during which then country suffered several balance of payments crises, three periods of hyperinflation, two defaults on government debt, and three banking crises. All told, between 1969 and...

Persistent link: https://www.econbiz.de/10012891419

The Monetary and Fiscal History of Paraguay, 1960–2017

Charotti, Carlos Javier - 2019

This chapter characterizes the monetary and fiscal history of Paraguay between 1960 and 2017. The analysis is divided into four periods, which are mainly distinguished by inflation levels, the source of financing of the public-sector deficit, and the central bank legal framework. The four main...

Persistent link: https://www.econbiz.de/10012891496

Human Frictions in the Transmission of Economic Policy

D'Acunto, Francesco - 2019

Intertemporal substitution is at the heart of modern macroeconomics and finance as well as economic policymaking, but a large fraction of a representative population of men – those below the top of the distribution by cognitive abilities (IQ) – do not change their consumption propensities...

Persistent link: https://www.econbiz.de/10012893775

Monetary and Fiscal History of Peru 1960-2017 : Radical Policy Experiments, Inflation, and Stabilization

Martinelli, César - 2019

We show that Peru's chronic inflation through the 1970s and 1980s was a result of the need for inflationary taxation in a regime of fiscal dominance of monetary policy. Hyperinflation occurred when further debt accumulation became unavailable, and a populist administration engaged in a...

Persistent link: https://www.econbiz.de/10012898370

The Monetary and Fiscal History of Chile : 1960-2016

Caputo, Rodrigo - 2019

Chile has experienced deep structural changes in the last fifty years. In the 1970s a massive increase in government spending, not financed by an increase in taxes or debt, induced high and unpredictable inflation. Price stability was achieved in the early 1980s, after a fixed exchange rate...

Persistent link: https://www.econbiz.de/10012898371

The Monetary and Fiscal History of Colombia : 1960-2017

Perez-Reyna, David - 2019

In this paper we characterize the joint history of monetary and fiscal policies in Colombia since 1960. We divide our analysis into three periods, which are differentiated by the finance structure of the fiscal deficit, the institutional framework of monetary and fiscal policies, and the levels...

Persistent link: https://www.econbiz.de/10012898372

The Monetary and Fiscal History of Mexico : 1960-2017

Meza, Felipe - 2019

The objective of this paper is to analyze the monetary and fiscal history of Mexico using a model of the consolidated budget constraint of the Mexican government as the framework. I assume a small open economy in which the government exports oil. I study the period 1960-2016. I evaluate the...

Persistent link: https://www.econbiz.de/10012898373