Ewerhart, Christian; Cassola, Nuno; Ejerskov, Steen; … - In: The European Journal of Finance 15 (2009) 4, pp. 405-420
This article derives a central bank's optimal liquidity supply towards a money market with an unrestricted lending facility. We show that when the effect of liquidity on market rates is not too small, and the monetary authority is concerned with both interest rates and liquidity conditions, then...