Measuring the Ampleness of Reserves

Gara Afonso, Gabriele La Spada and John Williams

No 20221005, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Over the past fifteen years, reserves in the banking system have grown from tens of billions of dollars to several trillion dollars. This extraordinary rise poses a natural question: Are the rates paid in the market for reserves still sensitive to changes in the quantity of reserves when aggregate reserve holdings are so large? In today’s post, we answer this question by estimating the slope of the reserve demand curve from 2010 to 2022, when reserves ranged from $1 trillion to $4 trillion.

Keywords: reserve demand; federal funds; ample reserves; monetary policy (search for similar items in EconPapers)
JEL-codes: E52 (search for similar items in EconPapers)
Date: 2022-10-05
New Economics Papers: this item is included in nep-ban and nep-mon
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