Interest on reserves and inflation

• 成果类型: Article
• 署名作者: Liviatan, Nissan; Frish, Roni
• 署名单位: Bank of Israel
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2005.02.009
• 发表日期: 2006
• 页码: 269-274
• 关键词: Monetary policy; inflation; discretionary regime; Interest on reserves

摘要

The payment of interest on reserves has been a common practice in inflationary economies. This policy may seem paradoxical since it involves returning part of the seigniorage, generated by the inflation process, with the intention to finance the fiscal deficit. This paper argues that the motivation for this policy can be captured by the discretionary regime, where the policymaker pays interest on reserves because he is concerned with the erosion of real liquidity by inflation, which is in part beyond his control. However, this policy is an unlikely outcome in the commitment regime, where the policymaker is in full control of inflation. (c) 2005 Elsevier B.V All rights reserved.