What is the macroeconomic impact of changing money market conditions?

Fiorella De Fiore, Marie Hoerova and Harald Uhlig ()

Research Bulletin, 2019, vol. 57

Abstract: Money markets are an important source of short-term funding for banks, which rely heavily on them to cover their liquidity needs. But when money markets do not function smoothly, banks may have to de-leverage or increase their holdings of liquid assets, leading to a decline in lending and output. This decline can be mitigated by central banks if they increase the size of their balance sheets. JEL Classification: G10, G20, E44, E52, E58

Keywords: Collateral; Liquidity; Monetary policy; Money markets (search for similar items in EconPapers)
Date: 2019-04
Note: 919428
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