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Open-market operations in a model of regulated, insured intermediaries

Author

Listed:
  • John Bryant
  • Neil Wallace

Abstract

In ?The Inefficiency of Interest-Bearing National Debt,? (JPE, April 1979) we argued that private sector transaction costs are needed in order to explain interest on government debt. It follows that if the government?s transaction costs do not depend on its portfolio, then, barring special circumstances, an open-market purchase is deflationary and welfare improving. In this paper we show that this result can survive a potentially relevant special circumstance: reserve requirements which limit the size of insured intermediaries.

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  • John Bryant & Neil Wallace, . "Open-market operations in a model of regulated, insured intermediaries," Staff Report, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmsr:34
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    References listed on IDEAS

    as
    1. Bryant, John & Wallace, Neil, 1979. "The Inefficiency of Interest-bearing National Debt," Journal of Political Economy, University of Chicago Press, vol. 87(2), pages 365-381, April.
    2. Merton H. Miller & Daniel Orr, 1966. "A Model of the Demand for Money by Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(3), pages 413-435.
    3. Leonall C. Andersen & Jerry L. Jordan, 1968. "Monetary and fiscal actions: a test of their relative importance in economic stabilization," Review, Federal Reserve Bank of St. Louis, vol. 50(Nov), pages 11-23.
    4. George L. Perry, 1978. "Slowing the Wage-Price Spiral: The Macroeconomic View," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 9(2), pages 259-299.
    5. Stein, Jerome L, 1979. "Inside the Monetarist Black Box: Reply," American Economic Review, American Economic Association, vol. 69(5), pages 944-946, December.
    6. Kareken, John H & Wallace, Neil, 1978. "Deposit Insurance and Bank Regulation: A Partial-Equilibrium Exposition," The Journal of Business, University of Chicago Press, vol. 51(3), pages 413-438, July.
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    Cited by:

    1. Stanley Fischer, 1980. "On Activist Monetary Policy with Rational Expectations," NBER Chapters, in: Rational Expectations and Economic Policy, pages 211-247, National Bureau of Economic Research, Inc.
    2. John Bryant, . "Transactions demand for money," Staff Report, Federal Reserve Bank of Minneapolis.
    3. Stanley Fischer, 1979. "On Activist Monetary Policy With Rational Expectations," NBER Working Papers 0341, National Bureau of Economic Research, Inc.

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