search query: @author Schreft, S. L. / total: 4
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| Author: | Schreft, S. L. Smith, B. D. |
| Title: | The effects of open market operations in a model of intermediation and growth. |
| Journal: | Review of Economic Studies
1998 : JUL, VOL. 65(3): 224, p. 519-550 |
| Index terms: | MONETARY POLICY FINANCIAL MARKETS ECONOMETRIC MODELS |
| Language: | eng |
| Abstract: | The article presents a monetary growth model where spatial separation and limited communication create a role for banks. Monetary policy interacts with the financial system's liquidity provision to affect the existence, multiplicity, and dynamic properties of equilibria. Moderate levels of risk aversion and risk aversion and tight monetary policy can lead to multiple steady states.Dynamical equilibria can be indeterminate, with oscillatory paths. The financial market frictions are a source of indeterminancies and endogenous volatility. Under plausible conditions, tight monetary policy raises the nominal interest rate and inflation rate and reduces long run output. Thus, a central bank's liquidity provision can promote growth. |
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