Interest, Reserves, and Prices

Gianluca Benigno and Pierpaolo Benigno

No 971, Staff Reports from Federal Reserve Bank of New York

Abstract: We would like to propose a new framework for monetary policy analysis that encompasses, as a special case, the Neo-Wicksellian paradigm. A general form of an aggregate-demand equation reveals a role for liquidity, as well as less effective movements in future real rates with respect to current ones, in stimulating aggregate demand. The quantity of reserves and their interest rate both matter for determining inflation and economic activity.

Keywords: monetary policy framework; reserves; inflation (search for similar items in EconPapers)
JEL-codes: E31 E43 E52 E58 (search for similar items in EconPapers)
Pages: 43
Date: 2021-06-01
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Citations: View citations in EconPapers (1)

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