The Friedman Rule and Optimal Monetary Policy
In: The Canadian Journal of Economics, Band 31, Heft 2, S. 295
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In: The Canadian Journal of Economics, Band 31, Heft 2, S. 295
In: Economica, Band 63, Heft 251, S. 477
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In: Journal of the Korean Economy, Band 8, Heft 2 (Fall 2007)
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In: IMF Working Paper, S. 1-30
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In: Review of financial economics: RFE, Band 14, Heft 2, S. 147-171
ISSN: 1873-5924
AbstractCentral banks smooth fluctuations in interest rates based on a belief that this policy promotes financial stability. This belief is based on a presumption that the direct effect of less interest rate volatility on a bank's likelihood of insolvency is the predominant effect of this policy. The main point of this paper is that these policies also give rise to indirect effects that lower financial stability. These indirect effects occur because the policy itself alters bank behavior. In effect, if the central bank provides (liquidity) insurance (at zero premia), it may introduce a classic moral hazard problem that encourages risk taking by banks. As a result, to maintain a given degree of financial stability, a bank regulator may, in fact, need to impose a higher prudential capital requirement when an interest rate smoothing policy is in place. The paper concludes that the link between interest rate smoothing policy and financial stability may be more complicated than is generally recognized.
In: IMF Working Paper, S. 1-38
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In: IMF Working Paper, S. 1-43
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In: The journal of economic history, Band 57, Heft 3, S. 697-717
ISSN: 1471-6372
This article proposes a unified framework for studying the greenback-gold price during the U.S. suspension of convertibility from 1862 to 1879.The gold price is viewed as a floating exchange rate, with a fixed destination given by gold standard parity because of the prospect of resumption. This perspective is tested using daily data for the entire period, and the effect of news during and after the Civil War is measured. New evidence of a decline in the volatility of gold returns after the Resumption Act of 1875 provides statistical support for the importance of expectations of resumption.
In: The Economic Journal, Band 100, Heft 399, S. 164