Fiche du document
- handle: 10670/1.por0gg
- halshs: halshs-01611650
info:eu-repo/semantics/OpenAccess
Mots-clés
monetary policy interbank market heterogeneous interbank frictions the corridor excess reserves financial intermediationSujets proches
Monetary managementCiter ce document
Guillaume A. Khayat, « The Corridor's Width as a Monetary Policy Tool », HAL-SHS : économie et finance, ID : 10670/1.por0gg
Métriques
Partage / Export
Résumé
Credit institutions borrow liquidity from the central bank’s lending facility and deposit (excess) reserves at its deposit facility. The central bank directly controls the corridor: the non-market interest rates of its lending and deposit facilities. Modifying the corridor changes the conditions on the interbank market and allows the central bank to set the short-term interest rate in the economy. This paper assesses the use of the corridor’s width as an additional tool for monetary policy. Results indicate that a symmetric widening of the corridor boosts output and welfare while addressing the central bank’s concerns over higher risk-taking in the economy.