Optimal monetary policy with interest on reserves and capital over-accumulation

• 成果类型: Article
• 署名作者: Hu, Tai-Wei
• 署名单位: University of Bristol
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2021.105319
• 发表日期: 2021
• 关键词: Monetary policy; Interest on reserves; Banking regulations

摘要

We propose a model where banks with limited liability issue deposits backed by capital, and households demand deposits and currency as means-of-payments for decentralized trades. When financial friction is severe or productivity is low, banks hold excess reserves in equilibrium with a low nominal interest rate, and with capital holdings above the efficient level. In that region, paying a positive interest on reserves financed by money creation is optimal. Under a fixed inflation target, optimal interest rate on reserves is procyclical. The constrained efficient allocation is implemented with a fixed and a proportional liquidity requirement in addition to interest on reserves when productivity is not too high. (c) 2021 Elsevier Inc. All rights reserved.