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Woodford (2003) describes a popular class of neo-Wicksellian models in which monetary policy is characterized by an interest-rate rule, and the money market and financial institutions are typically not even modeled. Critics contend that these models are incomplete and unsuitable for...
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The state of bank liquidity, measured as the banks' net excess reserves (NER) with the central bank, is a critical … interest rates. The latter condition aims at influencing the exogenous force, the demand for bank loans. Satisfaction of the … demand for bank loans has the simultaneous outcome of deposit money creation …
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