individual banks that face random investment opportunities by creating inside money. Banks are subject to a reserve requirement … and have access to the interbank money market. The model shows that lowering the money market rate relative to the … inflation rate reduces investment and welfare. This is because the money market is an outside option for banks that face bad …

transmission process in the UK. In particular, close attention is paid to the role played by money and credit as intermediate … are lengthy (at least 18 months). And third, that aggregate measures of money and credit may provide blurred signals of …