Optimal monetary policy in a world with risky investments and financial intermediaries

Article Abstract:

The effect of inflation on investments in a model where financial intermediaries mediate the flow of funds between borrowers and savers in the loan market based on a dependency on credit rationing and the ability of the intermediary to provide inside money. Providing inside money increases inflation by decreasing investments while credit rationing increases inflationary pressures. A monetary policy that takes into account the action of outside money as a stimulator of investments can help check inflation.

Regulation, Licensing, and Inspection of Miscellaneous Commercial Sectors, Banking Regulation, Inflation (Finance), Banking law, Credit management, Inflation (Economics)

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Optimal sterilization policies in interdependent economies

Article Abstract:

A model was developed to test the effects of sterilization policies on a two-country leader-follower structure with an imperfect asset substitution paradigm in comparison to a two-country model with flexible and fixed exchange rate regimes. Partial sterilization was generated as the best solution, since any sterilization on the leader will be followed by a stronger sterilization by the follower country. The occurrence of full sterilization leads to disruptive reserve flows.

Economic Programs, Administration of Economic Programs, Economic policy

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