Monetary policy, banking, and growth

Banks and banking ; Economic development ; Monetary policy

A comparison of alternative monetary environments

Monetary policy ; Bank reserves

Price stabilization, output stabilization and coordinated monetary policy actions

Monetary policy ; Prices

On quantity theory restriction and the signalling of the money multiplier

Money ; Prices

Augmented information in a theory of ambiguity, credibility and inflation

Monetary policy - United States ; Money supply

Reliance, composition, and inflation

In this article Joydeep Bhattacharya and Joseph Haslag explore the effect of fiscal policy actions on long-run prices and the inflation rate. They study a model economy in which the central bank is not independent. Indeed, the government explicitly relies on the central bank for a predetermined amount of its revenue. Despite the absence of independence, the central bank does unilaterally control the composition of government paper. Bhattacharya and Haslag show that changes in reliance and composition have long-run impacts on prices and inflation. They conduct two separate policy experiments that suggest how a subservient central bank can retain substantial control over the inflation rate and still meet its revenue requirements set by the government.

The effects of monetary policy in a model with reserve requirements

Monetary policy ; Bank reserves

Endogenous Credit Cycles

We build a model in which verifiability of private debts, timing mismatch in debt settlements and borrowing leverage lead to liquidity crisis in the financial market. Central bank can respond to the liquidity crisis by adopting an unconventional monetary policy that resembles repurchase agreements between the central bank and the lenders. This policy is effective if the timing mismatch is nominal (i.e., a settlement participation risk). It is ineffective if the timing mismatch is driven by a real shock (i.e., preference shock).liquidity problem, timing mismatch, leveraging, liquidity shock, settlement risk, repurchase agreement, consumption shock

Should bank reserves earn interest?

This article examines the effects and desirability of paying interest on required reserves. Scott Freeman and Joseph Haslag demonstrate that a policy of paying interest on reserves can make everyone better off, even if the interest must be financed by a tax on capital. An essential part of this policy is an open market operation that offsets any changes in the value of money.Bank reserves

On Fed Watching and Central Bank Transparency

In this paper, I examine central bank transparency in two different general equilibrium settings. A transparent central bank eliminates any uncertainty about future money growth. Agents can expend resources to process messages about future money growth, which is labelled fed watching. So transparency is equivalent to a case in which a private agent processes all of the central bank's messages and correctly infers what the future money growth rate will be. In both settings, conditions are derived in which a proper subset of messages are processed. In one setting, this outcome reflects the central bank's efforts to be secretive. In the other, the central bank is opaque because the absence of transparency is the key to letting a benevolent central bank follow a state-contingent rule