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Working Paper
Optimal disinflation paths when growth is endogenous
Working Paper
Bank intermediation and persistent liquidity effects in the presence of a frictionless bond market
An ?expansionary? monetary policy that increases the growth rate of bank reserves is generally believed by policy makers to induce a ?liquidity effect?, or a persistent decline in short-term nominal interest rates, that stimulates real activity. Christiano, et al. (1991,1995,1997) have incorporated this feature of the economy into equilibrium business cycle models by introducing a commercial bank that acquires deposits from households and channels those funds to firms, which use them to fund their working capital expenses. Bank deposits are the only interest-bearing financial asset available ...
Working Paper
An RBC model with growth: the role of human capital
Journal Article
Banks, bonds, and the liquidity effect
An "easing" of monetary policy can be characterized by an expansion of bank reserves and a persistent decline in the federal funds rate that, with a considerable lag, induces a pickup in employment, output, and prices. This article presents empirical evidence consistent with this depiction of the dynamic response of the economy to monetary policy actions and develops a theoretical model that exhibits similar dynamic properties. The decline in the federal funds rate is referred to as the "liquidity effect" of an expansionary monetary policy. A key feature of this class of theoretical ...