Arbeitspapier

Optimal Central Bank Lending

We analyze optimal monetary policy in a sticky pricemodel where the central bank supplies money outrightvia asset purchases and lends money temporarily againstcollateral. The terms of central bank lending affect ra-tioning of money and impact on macroeconomic aggre-gates. The central bank can set the policy rate and itsinflation target in a way that implements the first bestlong-run allocation, which is impossible if money weresupplied in a lump-sum way (as commonly assumed).Efficient central bank lending further increases gainsfrom macroeconomic stabilization beyond pure interestrate policy. This requires departing from a Treasuries-only regime.

Language
Englisch

Bibliographic citation
Series: Tinbergen Institute Discussion Paper ; No. 10-057/2

Classification
Wirtschaft
Business Fluctuations; Cycles
Subject
Optimal monetary policy
central bank instruments
collateralized lending
liquidity premium
inflation
Geldpolitik
Kreditsicherung
Liquidität
Preisrigidität
Inflationssteuerung
Theorie

Event
Geistige Schöpfung
(who)
Schabert, Andreas
Event
Veröffentlichung
(who)
Tinbergen Institute
(where)
Amsterdam and Rotterdam
(when)
2010

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Schabert, Andreas
  • Tinbergen Institute

Time of origin

  • 2010

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