The Use of Credit Ceilings in the Presence of Indirect Monetary Instruments: An Analytical Framework
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
In 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.
Series:
Working Paper No. 2002/206
Subject:
Banking Commercial banks Credit Credit ceilings Monetary base
English
Publication Date:
December 1, 2002
ISBN/ISSN:
9781451874617/1018-5941
Stock No:
WPIEA2062002
Pages:
16
Please address any questions about this title to publications@imf.org