Brief Outline of Topics Covered in Lecture 7
Chapter 14 Multiple Deposit Creation and the Money Supply Process [continued]
The Money Supply Model and the Money Multiplier
- Deriving the Money Multiplier
Factors That Determine the Money Multiplier
- Changes in the Required Reserve Ratio, r
- Changes in the Currency Ratio, c = C/D
- Changes in the Excess Reserves Ratio, e = ER/D
Additional Factors That Determine the Money Supply
- Changes in the Nonborrowed Monetary Base, MBn
- Changes in Borrowed Reserves, BR, from the Fed
Chapter 15 Tools of Monetary Policy
The Market for Reserves and the Federal Funds Rate
- Supply and Demand in the Market for Reserves
- Tools of monetary policy: Open Market Operations, Discount Policy, and Reserve Requirements
Application:
Q&A: A Voice for an Activist Fed, NY Times: The Federal Reserve is often described as if it were a person – just one person – but it actually makes decisions by committee, and that committee is in flux. Only six of the 12 officials who voted on policy last January will still be voting when the Federal Open Market Committee holds its first meeting of 2014 this week.
Two new voters are likely to define the extremes of the debate as the committee charts the Fed’s continuing effort to revive the economy.
One is Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, perhaps the last official who wants the Fed to expand its efforts to reduce unemployment. Meanwhile, Richard Fisher, president of the Federal Reserve Bank of Dallas, is pressing for a faster retreat.
Mr. Kocherlakota and Mr. Fisher sat for separate interviews with The New York Times to talk about monetary policy and the economy this month before the media blackout that precedes each Fed meeting.
A transcript of Mr. Kocherlakota’s comments, edited for clarity, follows. [Mr. Fisher’s interview is in a separate post.]
...[continue to interview]...