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What is the macroeconomic impact of changing money market conditions?

Author

Listed:
  • De Fiore, Fiorella
  • Hoerova, Marie
  • Uhlig, Harald

Abstract

Money markets are an important source of short-term funding for banks, which rely heavily on them to cover their liquidity needs. But when money markets do not function smoothly, banks may have to de-leverage or increase their holdings of liquid assets, leading to a decline in lending and output. This decline can be mitigated by central banks if they increase the size of their balance sheets. JEL Classification: G10, G20, E44, E52, E58

Suggested Citation

  • De Fiore, Fiorella & Hoerova, Marie & Uhlig, Harald, 2019. "What is the macroeconomic impact of changing money market conditions?," Research Bulletin, European Central Bank, vol. 57.
    • Handle: RePEc:ecb:ecbrbu:2019:0057:
    Note: 919428
    as

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    References listed on IDEAS

    as
    1. Fiorella De Fiore & Marie Hoerova & Ciaran Rogers & Harald Uhlig, 2018. "Money Markets, Collateral and Monetary Policy," NBER Working Papers 25319, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Collateral; Liquidity; Monetary policy; Money markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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