Divorcing Money from Monetary Policy

Trade Dynamics in the Market for Federal Funds

“…In order to conduct policy and counterfactual experiments, it is useful to work with a parametric distribution of balances, so instead of working with the empirical frequency of balances as in Section 6.1, here we estimate the initial distribution with 2011 data by maximum likelihood using a Gaussian mixture model with 2 components. 28 2008) conclude, "While the floor system has received a fair amount of attention in policy circles recently, there are important open questions about how well such a system will work in practice. Going forward, it will be useful to develop theoretical models of the monetary policy implementation process that can address these questions."…”

“…Since b(k, k ′ , τ ) and R(k ′ , k, τ ) satisfy (28) and (29), the previous expression for the mapping M can be written as…”

Monetary Policy Implementation Frameworks: A Comparative Analysis

“…In ‡ation's distortions in the goods market cannot be eliminated with monetary policy, since there is no possibility for OMOs there. 13 Hence, the budget constraint will bind for consumers. However distortions in the Treasury market can be eliminated for agents with " = 1.…”

“…More details are available at: http://www.federalreserve.gov/monetarypolicy/taf.htm. 2 See, for example, Keister, Martin, and McAndrews (2008).…”

Changes in Central Bank Procedures During the Subprime Crisis and Their Repercussions on Monetary Theory

“…This is what two economists at the Bank for International Settlements, Borio and Disyatat (2009), call the decoupling principle. The floor system has been briefly proposed by Woodford (2000: 255), Goodfriend (2002: 3), Fullwiler (2005), and Ennis and Keister (2008), and a more detailed argument in favor of this proposal can be found in Keister, Martin, and McAndrews (2008).…”