Suchergebnisse

We investigated, empirically, why Japanese banks held excess reserves in the late 1990s. Specifically, we pin down two factors explaining the demand for excess reserves: a low short-term interest rate, or call rate, and the fragile financial health of banks. The virtually zero call rate increased the demand for excess reserves substantially, and a high bad loans ratio largely contributed to the increase in excess reserve holdings. We found that the holdings of excess reserves would fall by half if the call rate were to be raised to its level prior to the adoption of the zero-interest-rate policy, and the bad loans ratio were to fall by 50%.

The hypothesis of catastrophic expectations is formulated mathematically and the construction of a model that takes into account divergent expectations of agents resulting from differences between them in learning level is discussed. This model is used to estimate the degree of learning in the copper market. It is shown that price stabilization temporarily and cyclically improves aggregate welfare and makes timing of policy implementation critical. (DÜI-Sen)