Publication: Money, reserves, and the transmission of monetary policy: does the money multiplier exist?
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Carpenter, Seth
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Embargo Status
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Abstract
With the use of non-traditional policy tools, the level of reserve balances has risen in the US from roughly $20 billion before the financial crisis to well past $1 trillion. The effect of reserve balances in macroeconomic models often comes through the money multiplier, affecting the money supply and the bank lending. In this paper, we document that the mechanism does not work through the standard multiplier model or the bank lending channel. If the level of reserve balances is expected to have an impact on the economy, it seems unlikely that a standard multiplier story will explain the effect. (C) 2011 Elsevier Inc. All rights reserved.
Source
Publisher
Elsevier
Subject
Economics
Citation
Has Part
Source
Journal of Macroeconomics
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DOI
10.1016/j.jmacro.2011.09.009