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The Demand for Excess Reserves

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  • James P. Dow

Abstract

This paper provides an estimate of the demand for excess reserves in the United States. It finds that excess reserves are negatively related to the Federal funds rate and positively related to transactions deposits. It also finds that clearing needs significantly affect the demand for reserves with increases in excess reserves coming in response to lower required reserve balances and higher clearing volume. Some implications for monetary policy are discussed.

Suggested Citation

  • James P. Dow, 2001. "The Demand for Excess Reserves," Southern Economic Journal, John Wiley & Sons, vol. 67(3), pages 685-700, January.
    • Handle: RePEc:wly:soecon:v:67:y:2001:i:3:p:685-700
    DOI: 10.1002/j.2325-8012.2001.tb00363.x
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    References listed on IDEAS

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    1. Griffiths, Mark D. & Winters, Drew B., 1995. "Day-of-the-week effects in federal funds rates: Further empirical findings," Journal of Banking & Finance, Elsevier, vol. 19(7), pages 1265-1284, October.
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    5. Clouse, James A. & Dow Jr., James P., 1999. "Fixed costs and the behavior of the federal funds rate," Journal of Banking & Finance, Elsevier, vol. 23(7), pages 1015-1029, July.
    6. Hamilton, James D, 1996. "The Daily Market for Federal Funds," Journal of Political Economy, University of Chicago Press, vol. 104(1), pages 26-56, February.
    7. Evanoff, Douglas D., 1990. "An empirical examination of bank reserve management behavior," Journal of Banking & Finance, Elsevier, vol. 14(1), pages 131-143, March.
    8. Craig H. Furfine, 1998. "Interbank payments and the daily federal funds rate," Finance and Economics Discussion Series 1998-31, Board of Governors of the Federal Reserve System (U.S.).
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    11. Ann-Marie Meulendyke, 1998. "U.S. monetary policy and financial markets," Monograph, Federal Reserve Bank of New York, number 1998mpaf.
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