Economics at your fingertips  

A simple general equilibrium model of large excess reserves

Huberto Ennis ()

Journal of Monetary Economics, 2018, vol. 98, issue C, 50-65

Abstract: In a general equilibrium macroeconomic model with a banking system that can hold large excess reserves and is subject to (possibly binding) capital constraints, I study how the quantity of government-provided monetary assets is related to the price level in steady state. When the central bank does not pay interest on reserves, the price level moves one-for-one with the monetary base. If, instead, the central bank can pay interest on reserves at market rates, the price level can decouple from the quantity of monetary assets in the economy: a larger monetary base need not imply a higher price level. However, for large enough levels of reserves, the capital constraint binds and the tight link between money and prices reemerges.

Keywords: Banking; Monetary policy; Central bank (search for similar items in EconPapers)
JEL-codes: E40 E50 G21 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: A Simple General Equilibrium Model of Large Excess Reserves (2014) Downloads
Working Paper: A simple general equilibrium model of large excess reserves (2014)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

Journal of Monetary Economics is currently edited by R. G. King and C. I. Plosser

More articles in Journal of Monetary Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-08-20
Handle: RePEc:eee:moneco:v:98:y:2018:i:c:p:50-65