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- Title
Interest on Reserves and Daylight Credit.
- Authors
Ennis, Huberto M.; Weinberg, John A.
- Abstract
The article discusses the interest rates placed on bank reserves. Given the 2006 legislation passed by the U.S. Congress that authorizes the Federal Reserve to pay interest on banks' reserve balances, the author examines the nature of the reserve market, the model proposed by Marvin Goodfriend that determines the equilibrium interest rate for reserves, and the effect of this model on the central bank's authority. The author concludes that the model fails to the welfare economics of reserves.
- Subjects
BANK reserves; INTEREST rates; BANKING industry; GOODFRIEND, Marvin; BOARD of Governors of the Federal Reserve System (U.S.)
- Publication
Economic Quarterly (10697225), 2007, Vol 93, Issue 2, p111
- ISSN
1069-7225
- Publication type
Article