This paper examines whether monetary indicators are useful in implementing optimal discretionary monetary policy when the policy maker has incomplete information about the environment. We find that money does not contain useful information for the policy maker, if we calibrate the model to the...

This article provides a comparative analysis of central bank operating procedures in Australia and the United States. It also examines the effect that the structure of overnight money markets, reserve requirements, and central bank lending procedures have on monetary control in both countries....

The Reserve Bank of New Zealand operates in a highly deregulated financial environment which lacks any interest rate regulation or reserve requirements. Yet the Reserve Bank has been able to implement effective monetary policy through a quantity-based procedure. This article analyzes the...

This paper studies bank regulation in the presence of deposit insurance, where banks have private information on their own ability and their investment strategy. Banks choose the mean and variance of their portfolio return. Regulators wish to control banks' risk choice, even though all agents...

The East Asian financial crisis exposed the problems of excessive government intervention in credit allocation and poor supervision of the banking system. We argue that the crisis is an opportunity to reformulate the strategies of growth by way of eliminating politicized intervention on...

As the severity of the problems facing the federal deposit insurance funds become more obvious, the chorus of support for some form of market value accounting is growing. Proponents cite the benefits of increased disclosure and the discipline such accounting would bring about. Opponents argue...

We construct an endogenous growth model in which bank runs occur with positive probability in equilibrium. In this setting, a bank run has a permanent effect on the levels of the capital stock and of output. In addition, the possibility of a run changes the portfolio choices of depositors and of...

Governments typically respond to a run on the banking system by temporarily freezing deposits and by rescheduling payments to depositors. Depositors may even be required to demonstrate an urgent need for funds before being allowed to withdraw. We study ex post efficient policy responses to a...

The paper assesses the role of a Reserve Bank in the Federal Reserve System. It compares the Eurosystem with the Fed System, and offers suggestions for the Eurosystem based on the Fed's experience. A regional presence facilitates surveillance of the economy and helps a central bank to...

The paper contains a theoretical discussion of the role of secrecy in the implementation of monetary policy. It documents the Federal Reserve's defense of secrecy as argued in a recent Freedom of Information Act suit. The Federal Reserve's arguments are evaluated on the basis of economic theory....