Liquidity: A New Monetarist Perspective

The Art of Monetary Theory: A New Monetarist Perspective∗

Liquidity, Financial Intermediation, and Monetary Policy in a New Monetarist Model

A model of monetary exchange with private financial intermediation is constructed. Claims on financial intermedaries of two types are traded in transactions: circulating notes and deposits. There can be a role for the government in supplying liqudity, and level changes in the money supply accomplished through open market operations can be nonneutral. A Friedman rule is suboptimal, due to costs ...

Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach

A model of public and private liquidity is constructed that integrates financial intermediation theory with a New Monetarist monetary framework. Key features of the model are non-passive fiscal policy and costs of operating a currency system, which imply that an optimal policy deviates from the Friedman rule. A liquidity trap can exist in equilibrium away from the Friedman rule, and there exist...

Appendix to “Liquidity, Monetary Policy, and the Financial Crisis: A New Monetarist Approach”

holds, then (51) holds for for  ≥  and  ∈ ( ()]. However (51) does not hold for 0     if (52) holds. If   0 and (52) holds then (51) holds for  ∈ ( ()] If (52) does not hold, then from (51) an equilibrium of this type cannot exist for   0 If  ≤   0 and (52) does not hold, then (51) holds for  ∈ ( ()] Proof of Propositions 1(ii), 2(ii), and 3(ii). In an equ...

Liquidity, Financial Intermediation, and Monetary Policy in a New Monetarist Model (Beware: Typos)

A model of monetary exchange with private financial intermediation is constructed. Claims on financial intermedaries of two types are traded in transactions: circulating notes and deposits. There can be a role for the government in supplying liqudity, and level changes in the money supply accomplished through open market operations can be nonneutral. A Friedman rule is suboptimal, due to costs ...