The demand for bank reserves and other monetary aggregates

Gillman, Max and Kejak, Michal 2003. The demand for bank reserves and other monetary aggregates. [Working Paper]. Economics Working Paper, vol. 8/2003. Budapest: Central European University (CEU) - Department of Economics.

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Abstract

The paper starts with Haslag's (1998) model of the bank's demand for reserves and reformulates it with a cash-in-advance approach for both financial intermediary and consumer. This gives a demand for a base of cash plus reserves that is not sensitive to who gets the inflation tax transfer. It extends the model to formulate a demand for demand deposits, yielding an M1-type demand, and then includes exchange credit, yielding an M2-type demand. Based on the comparative statics of the model it provides an interpretation of the evidence on monetary aggregates. This explanation relies on the nominal interest as well as technology factors of the banking sector.

Item Type:	Monograph (Working Paper)
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory
Uncontrolled Keywords:	Bank reserves; money demand; aggregates
Publisher:	Central European University (CEU) - Department of Economics
Last Modified:	19 Mar 2016 23:15
URI:	https://orca.cardiff.ac.uk/id/eprint/44437

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