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Multiple Reserve Requirements

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  • Espinosa-Vega, Marco A

Abstract

This paper investigates the consequences of government imposition of multiple reserve requirements on commercial banks. In particular, it examines a situation in which banks are required to hold some fraction of their customer's deposits in the form of domestic currency and another fraction in the form of interest bearing government bonds. Proponents of such requirements claim that for a given deficit, a multiple reserve scheme leads to a lower rate of inflation than would occur under a single reserve regime. I construct a model which provides a framework for analyzing this view. The analysis does not focus exclusively on the inflationary effect of alternative reserve regimes. The model also allows for welfare analysis. Copyright 1995 by Ohio State University Press.

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Bibliographic Info

Article provided by Blackwell Publishing in its journal Journal of Money, Credit and Banking.

Volume (Year): 27 (1995)
Issue (Month): 3 (August)
Pages: 762-76

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Handle: RePEc:mcb:jmoncb:v:27:y:1995:i:3:p:762-76

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-2879

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Cited by:
  1. Patrick Honohan, 2003. "Taxation of Financial Intermediation : Theory and Practice for Emerging Economines," World Bank Publications, The World Bank, number 15122, August.
  2. Marco Espinosa-Vega & Bruce D. Smith & Chong K. Yip, 1999. "On Government Credit Programs," Computing in Economics and Finance 1999 351, Society for Computational Economics.
  3. Rangan Gupta, 2005. "Costly State Monitoring and Reserve Requirements," Annals of Economics and Finance, Society for AEF, vol. 6(2), pages 263-288, November.
  4. Marco Espinosa & Steven Russell, 1996. "The Mexican economic crisis: alternative views," Economic Review, Federal Reserve Bank of Atlanta, issue Jan, pages 21-44.
  5. Marco Espinosa-Vega & Steven Russell, 1999. "A public finance analysis of multiple reserve requirements," Working Paper 99-19, Federal Reserve Bank of Atlanta.
  6. Marco Espinosa & Steven Russell, 1996. "Are there optimal multiple reserve requirements?," Working Paper 96-18, Federal Reserve Bank of Atlanta.
  7. Bas Aarle & Nina Budina, 1997. "Financial repression, money growth, and seignorage: The Polish experience," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 133(4), pages 683-707, December.
  8. Espinosa-Vega, Marco A. & Smith, Bruce D. & Yip, Chong K., 2002. "Monetary Policy and Government Credit Programs," Journal of Financial Intermediation, Elsevier, vol. 11(3), pages 232-268, July.
  9. Hung, Fu-Sheng, 2005. "Optimal composition of government public capital financing," Journal of Macroeconomics, Elsevier, vol. 27(4), pages 704-723, December.
  10. de Paso, Jose I. Garcia, 1997. "Multiple reserve requirements: an irrelevance result," Economics Letters, Elsevier, vol. 56(3), pages 333-338, November.
  11. Patrice Robitaille, 2011. "Liquidity and reserve requirements in Brazil," International Finance Discussion Papers 1021, Board of Governors of the Federal Reserve System (U.S.).

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