Short-run money growth volatility: evidence of misbehaving money demand?

Demand for money

Dynamic forecasting and the demand for money

Demand for money

The wayward money supply: a post-mortem of 1982

Money supply

Deficits and inflation

Inflation (Finance)

Reserve requirements: A modern perspective

The discussion in many money and banking textbooks would suggest that the Federal Reserve requires depository institutions to hold a minimum level of non-interest-earning reserves because (1) reserve requirements are a monetary policy tool that allows the Fed to expand the money supply and lower interest rates, and (2) reserve requirements improve the safety and soundness of depository institutions. This article argues that this "conventional wisdom" view is too narrow. ; The Fed often uses reserve requirement changes, the authors contend, to achieve non-monetary-policy objectives, as it did in 1992 to improve the profitability of depository institutions and ease the credit crunch of that time. The authors also challenge the notion that higher reserve requirements necessarily lead to greater safety and lower default risk for depository institutions. ; The article examines the relationship between reserve requirement changes and monetary policy, with the aim of demonstrating the recent, limited usefulness of reserve requirements as a monetary policy tool. The article proposes a more modern view of reserve requirements as a tax on depository institutions, ponders who really bears this tax, and summarizes a large and growing literature suggesting that perceived bank profitability is inversely affected by announced changes in reserve requirement ratios. The article also provides new evidence that the 1992 reserve requirement reductions were not associated with an increase in default risk for financial institutions that issue reservable instruments, as the conventional view would suggest.Monetary policy ; Financial institutions ; Bank reserves

Photovoltaic system costs using local labor and materials in developing countries

The use of photovoltaic (PV) technology in countries that do not presently have high technology industrial capacity was investigated. The relative cost of integrating indigenous labor (and manufacturing where available) into the balance of the system industry of seven countries (Egypt, Haiti, the Ivory Coast, Kenya, Mexico, Nepal, and the Phillipines) was determined. The results were then generalized to other countries, at most levels of development. The results of the study imply several conclusions: (1) the cost of installing and maintaining comparable photovoltaic systems in developing countries is less than in the United States; (2) skills and some materials are available in the seven subject countries that may be applied to constructing and maintaining PV systems; (3) there is an interest in foreign countries in photovoltaics; and (4) conversations with foreign nationals suggest that photovoltaics must be introduced in foreign markets as an appropriate technology with high technology components rather than as a high technology system

The shift in money demand: what really happened?

Demand for money

Evidence on the two monetary base measures and economic activity

Monetary policy ; Economic indicators

Measuring the policy effects of changes in reserve requirement ratios

The monetary base is the sum of high-powered money and an adjustment factor that measures changes in reserve requirement ratios. This adjustment factor is calculated so that it responds to changes in deposit levels in addition to changes in reserve requirements. Consequently, researchers and policymakers using the monetary base are seeing a mixture of changes implemented through open market operations, discount window borrowings, and reserve requirements, together with nonpolicy actions acting on deposit flows. ; Joseph Haslag and Scott Hein calculate the reserve step index (RSI) to separate changes in one of the available adjustment factors-the St. Louis Federal Reserve Bank's Reserve Adjustment Measure (RAM)-into pure reserve-requirement effects and deposit-flow effects. RSI would give analysts a measure that responds only to changes in reserve requirement ratios. Haslag and Hein also provide statistical evidence suggesting that combining RSI and the deposit-flow effect, as RAM does, is not justifiable in simple reduced-form models of nominal GNP growth, output growth, or inflation.Bank reserves