Floor systems for implementing monetary policy: Some unpleasant fiscal arithmetic

Arbeitspapier

An increasing number of central banks implement monetary policy via a channel system or a floor system. We construct a general equilibrium model to study the properties of these systems. We find that the optimal framework is a floor system if and only if the target rate satisfies the Friedman rule. Unfortunately, the optimal floor system requires either transfers from the fiscal authority to the central bank or a reduction in seigniorage payments from the central bank to the government. This is the unpleasant fiscal arithmetic of a floor system. When the central bank faces financing constraints on its interest expense, we show that it is optimal to operate a channel system.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 121

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Monetary Policy ; Central Banks and Their Policies ; Monetary Policy, Central Banking, and the Supply of Money and Credit: Other
• Thema: monetary policy ; floor system ; channel system ; standing facilities

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Berentsen, Aleksander ; Marchesiani, Alessandro ; Waller, Christopher J.
• Ereignis: Veröffentlichung
• (wer): University of Zurich, Department of Economics
• (wo): Zurich
• (wann): 2013

Weitere Informationen

• Handle: http://hdl.handle.net/10419/77484
• Letzte Aktualisierung: 10.03.2025, 11:46 MEZ