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Journal Article
Interest Rate Control Is More Complicated Than You Thought
Setting the fed funds rate is just one step. The Fed also has to deal with the discount rate and the interest rate paid on reserves. Throw in a floor system (with a subfloor!) and overnight reverse repos, and you?ve got a process that is anything but simple.
Journal Article
Neo-Fisherism: A Radical Idea, or the Most Obvious Solution to the Low-Inflation Problem?
Central banks around the world are struggling with inflation rates that are below their targets. According to conventional central banking wisdom, interest rate cuts should increase inflation, but that?s not working. Maybe?by Irving Fisher?s logic?increasing nominal interest rates increases inflation.
Working Paper
Money and dynamic credit arrangements with private information
The authors construct a model with private information in which consumers write dynamic contracts with financial intermediaries.
Journal Article
Monetary Policy Normalization in the United States
Because of the Federal Reserve?s unconventional approaches to monetary policy during the Great Recession and recovery, the Fed now finds itself in an unconventional situation. Short-term nominal interest rates have been close to zero for more than six years, and the Fed?s balance sheet is currently more than four times as large as in 2007. This article explains how and why the Fed got into this situation and the challenges this creates in returning Fed policy to ?normal??a state in which the Fed?s nominal interest rate target is above zero and its balance sheet is reduced in size.
Journal Article
Bank failures, financial restrictions, and aggregate fluctuations: Canada and the United States, 1870-1913
During 1870_1913, Canada had a well-diversified branch banking system while banks in the U.S. unit-banking system were less diversified. Canadian banks could issue large-denomination notes with no restrictions on their backing, while all U.S. currency was essentially an obligation of the U.S. government. Also, experience in the two countries with regard to bank failures and panics was quite different. A general equilibrium business cycle model with endogenous financial intermediation is constructed that captures these historical Canadian and American monetary and banking arrangements as ...
Journal Article
Recent developments in modeling financial intermediation
Journal Article
Quantitative Easing: How Well Does This Tool Work?
Evaluating the effects of monetary policy is difficult, even in the case of conventional interest rate policy. With unconventional monetary policy, the difficulty is magnified, as the economic theory can be lacking, and there is a small amount of data available for empirical evaluation. With respect to QE, there are good reasons to be skeptical that it works as advertised, and some economists have made a good case that QE is actually detrimental.
Report
New Monetarist Economics: models
The purpose of this paper is to discuss some of the models used in New Monetarist Economics, which is our label for a body of recent work on money, banking, payments systems, asset markets, and related topics. A key principle in New Monetarism is that solid microfoundations are critical for understanding monetary issues. We survey recent papers on monetary theory, showing how they build on common foundations. We then lay out a tractable benchmark version of the model that allows us to address a variety of issues. We use it to analyze some classic economic topics, like the welfare effects of ...
Conference Paper
Private money
Journal Article
Private money and counterfeiting