On the optimality of interest-bearing reserves in economies of overlapping generations

Econometrics

Should bank reserves earn interest?

This article examines the effects and desirability of paying interest on required reserves. Scott Freeman and Joseph Haslag demonstrate that a policy of paying interest on reserves can make everyone better off, even if the interest must be financed by a tax on capital. An essential part of this policy is an open market operation that offsets any changes in the value of money.Bank reserves

Constructing an alternative measure of changes in reserve requirement ratios

Bank reserves

Evidence on the two monetary base measures and economic activity

Monetary policy ; Economic indicators

Measuring the policy effects of changes in reserve requirement ratios

The monetary base is the sum of high-powered money and an adjustment factor that measures changes in reserve requirement ratios. This adjustment factor is calculated so that it responds to changes in deposit levels in addition to changes in reserve requirements. Consequently, researchers and policymakers using the monetary base are seeing a mixture of changes implemented through open market operations, discount window borrowings, and reserve requirements, together with nonpolicy actions acting on deposit flows. ; Joseph Haslag and Scott Hein calculate the reserve step index (RSI) to separate changes in one of the available adjustment factors-the St. Louis Federal Reserve Bank's Reserve Adjustment Measure (RAM)-into pure reserve-requirement effects and deposit-flow effects. RSI would give analysts a measure that responds only to changes in reserve requirement ratios. Haslag and Hein also provide statistical evidence suggesting that combining RSI and the deposit-flow effect, as RAM does, is not justifiable in simple reduced-form models of nominal GNP growth, output growth, or inflation.Bank reserves

Nominal GNP growth and adjusted reserve growth: nonnested tests of the St. Louis and Board measures

Gross national product ; Monetary policy

Does it matter how monetary policy is implemented?

Monetary policy

Federal Reserve System reserve requirements: 1959-88--a note

Federal Reserve System ; Bank reserves

Commodity Storage under Backwardation: Does the Working Curve Still Work?

We investigate storage in the presence of backwardation and the existence of the Working curve for CBOT corn, soybeans, and wheat markets and the KCBOT wheat market using recent data, 1990-2010. Incorporating Telser’s concept of the cost of carry, we employ two measures of the spread—the percent of full carry for futures-futures and futures-spot (maximum) spreads which are adjusted for interest and storage rates. Both spreads are calculated relative to the next nearby futures contract and are matched with closest weekly deliverable stock information available at the delivery locations for the contracts. Our findings indicate that storage at a loss is pervasive both in terms of the percent of observations that exhibited storage at a loss, and the magnitude of the stockholdings for those observations. The evidence for the importance of convenience yield in the Working curve is a little less systematic, with strongest support emerging in the KCBOT wheat market, CBOT wheat and corn in Toledo/Maumee, corn in Chicago, and soybeans at almost all locations.Storage, backwardation, CBOT, KCBOT, corn, soybean, wheat., Agribusiness, Demand and Price Analysis,