The Use of Credit Ceilings in the Presence of Indirect Monetary
AbstractIn this paper, we introduce credit ceilings in the standard model of the money multiplier and analyze their role in central bank’s management of money supply in the presence of indirect monetary instruments. We show that under a regime of total credit ceilings, their optimal value equals the desired growth rate of the adjusted monetary base. Under a regime of partial credit ceilings, their optimal value depends on the desired growth rate of the adjusted monetary base, the degree of substitutability between the regulated and unregulated types of banks’ earning assets, and the autonomous growth rate of the latter.
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Bibliographic InfoPaper provided by EconWPA in its series Macroeconomics with number 0302008.
Length: 17 pages
Date of creation: 27 Feb 2003
Date of revision:
Note: Type of Document - PDF; prepared on IBM PC; to print on PostScript; pages: 17 ; figures: included
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credit ceilings selective credit controls money multiplier;
Find related papers by JEL classification:
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-03-03 (All new papers)
- NEP-CBA-2003-03-03 (Central Banking)
- NEP-MAC-2003-03-03 (Macroeconomics)
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