Tunnels and reserves in monetary policy implementation
By: William Whitesell.
Series: Finance and economics discussion series ;; 2003-28; Finance and economics discussion series (Online) ;; 2003-28.
Publisher: Federal Reserve Board
Published: 2003
Place of publication: Washington, D.C
Language: eng
Format: Electronic resource
Subjects: Monetary policy -- Mathematical models.; Bank reserves -- Mathematical models.
Description: "In recent years, some central banks have implemented monetary policy without reserve requirements by using a ceiling and floor for overnight interest rates established by central bank lending and deposit facilities.  This paper analyzes a theoretical model of such a "tunnel" system and the benefits of adding reserve requirements to it.  However, reserve requirements may involve social costs owing to the reserve avoidance activities of banks.  The paper also presents a modified model with no reserve avoidance, where banks optimally choose to hold voluntary reserve requirements.  The paper highlights the importance for central banks to consider such models in light of idiosyncratic features of their own institutional environment, which may importantly condition the advisability of any particular approach"--Federal Reserve Board web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 7/26/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.