Journal of Money, Credit & Banking

Reports major findings in the study of financial institutions, financial markets, monetary and fiscal policy, credit markets, money and banking.

Articles from Vol. 35, No. 6, December

Adaptive Learning and Monetary Policy Design
THE CONDUCT OF MONETARY policy in terms of interest rate or other rules has been extensively studied in recent research, for surveys see, e.g. Clarida, Gali, and Gertler (1999), Woodford (1999b), and McCallum (1999). This literature gives a central...
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Anticipations of Monetary Policy in Financial Markets
THROUGH ADJUSTING the supply of reserves, a central bank can effectively control a single asset price--the short-term interest rate. In forward-looking financial markets, however, expectations regarding the future path of short-term rates can importantly...
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Backward-Looking Interest-Rate Rules, Interest-Rate Smoothing, and Macroeconomic Instability
IN A SEMINAL PAPER, Taylor (1993) showed that since 1987, actual monetary policy in the United States is well characterized by a simple rule whereby the central bank sets the short-term nominal interest rate as an increasing linear function of a measure...
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Bank Mergers and Small Firm Financing
SINCE 1990, the number of insured commercial banks has fallen by over 4000 as a result of merger, acquisition, or failure. (1) The causes of this consolidation have been well documented (e.g., Berger, Demsetz, and Strahan 1999), and a substantial literature...
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Fiscal Policy in the New Neoclassical Synthesis
WHAT ARE THE EFFECTS of changes in government expenditure on the business cycle? Historically, two different and mutually incompatible strands of theories have been advanced to answer this question. Broadly characterized, there is the Keynesian tradition,...
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How Forward-Looking Is Optimal Monetary Policy?
BOTH POSITIVE AND NORMATIVE accounts of monetary policy are often expressed in terms of systematic rules for determining the central bank's operating target for a short-term nominal interest rate in the light of current macroeconomic conditions, especially...
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Identifying the Macroeconomic Effect of Loan Supply Shocks
IN AN EARLIER STUDY, Peek, Rosengren, and Tootell (1999) established that confidential bank supervisory information could be used to improve macroeconomic forecasts and that, in fact, the Federal Open Market Committee considered this information when...
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Inflationary Expectations and the Fisher Effect Prior to World War I
MANY REASONS have been given for the apparent absence of a short-run Fisher effect in the U.S. before World War I. Friedman and Schwartz (1982) speculated that inflationary expectations adjusted with a very long lag as agents only gradually "learned...
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Information or Regulation: What Drives the International Activities of Commercial Banks?
INFORMATION COSTS and regulatory barriers distinguish international financial markets from domestic ones. International banking activities are particularly affected since their ability to overcome information asymmetries is one of the main reasons...
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In Search of "Capital Crunch": Supply Factors Behind the Credit Slowdown in Japan
THE SEEMING inability of standard macroeconomic policies to revive the Japanese economy continues to generate debates about the underlying cause of Japan's stagnation. While the fact that short-term nominal interest rates are already near zero has...
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Is Three a Crowd? Competition among Regulators in Banking
We have an unnecessary and unwise division of our commercial banks into national and state banks with forty-nine legislative bodies regulating and granting special privileges to their respective banks.... These conditions have been permitted...
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Output, Prices, and the Velocity of Money in Search Equilibrium
THE AGGREGATE PRODUCTION function has provided a simple and useful framework for the analysis of a broad array of topics in macroeconomics. (1) This approach, however, by abstracting from individual trading activity, has been unable to distinguish...
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Putting "M" Back in Monetary Policy
MONEY DEMAND and the stock of money have all but disappeared from monetary policy analyses. Reasons for the disappearance range from the declining correlations between conventional money measures and economic activity to the frustrating instability...
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Recent Developments in Monetary Macroeconomics
Introduction THE CONTENTS OF THIS VOLUME hardly require explanation beyond its title: "Recent Developments in Monetary Macroeconomics." Our intent for the conference was to collect a set of papers reflecting the cutting edge of applied monetary...
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Search, Money, and Capital: A Neoclassical Dichotomy
THERE SEEMS TO BE a big distance between standard macroeconomics and the branch of monetary theory with explicit microfoundations based on search, or matching, theory. As Azariadis (1993) put it, "Capturing the transactions motive for holding money...
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Taking Intermediation Seriously
MANY MODERN APPROACHES to macroeconomics attach no significance to financial intermediation. This is true despite the fact that various measures of banking activity are strongly correlated both with long-run real economic activity and with what happens...
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The Great Depression and the Friedman-Schwartz Hypothesis
THE PURPOSE OF this paper is to contribute to the construction of dynamic general equilibrium models useful for the analysis of policy questions. We do this by developing a standard monetary business cycle model in three directions: we add several...
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The Output Composition Puzzle: A Difference in the Monetary Transmission Mechanism in the Euro Area and United States
A CONSENSUS HAS emerged during the last 20 years, over the way that the actions of central banks affect the economy (the monetary transmission mechanism). In a nutshell, changes in monetary policy have a persistent, though not permanent, effect on...
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