International reserves and global interest rates

International Linkages in Short- and Long-term Interest Rates

This paper examines interest rate linkages in the G7 economies by testing for cointegration and employing the causality testing method for unstable systems recently introduced by Toda and Yamamoto (1995), which results in standard asymptotics. Our results show that whilst domestic macroeconomic variables are important determinants of long-term interest rates, international linkages play a major...

Interest on Reserves and Daylight Credit

B anks hold reserves in the form of account balances at the central bank and vault cash. The average aggregate reserves of depository institutions in the United States during 2005 was $46 billion. Banks use these reserves to settle payments to other banks (and other participants in financial markets) during the day. In 2005, the average daily value of Fedwire fund transfers—the primary means by...

World Real Interest Rates: A Global Savings and Investment Perspective

Global Knowledge, Local Solutions: Interest Rate and Monetary Policy

The Macroeconomic Effects of Interest on Reserves

This paper uses a New Keynesian model with banks and deposits, calibrated to match the US economy, to study the macroeconomic effects of policies that pay interest on reserves. While their effects on output and inflation are small, these policies require important adjustments in the way that the monetary authority manages the supply of reserves, as liquidity effects vanish and households’ portf...