Financial Intermediation and Monetary Policies in the World Economy

53 Pages Posted: 23 Apr 2004

See all articles by Vittorio Grilli

Vittorio Grilli

Independent; National Bureau of Economic Research (NBER)

Nouriel Roubini

New York University - Leonard N. Stern School of Business - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: May 1991

Abstract

In this paper we investigate the role of credit institutions in transmitting monetary shocks to the domestic economy and to the rest of the world output. In modeling the monetary and financial sector of the economy we distinguish between monetary injections via lump-sum transfers to individuals and those via increased credit to the commercial banking sector in the form of discount window operations. Appropriately, we distinguish between the discount rate of the central bank and the lending and borrowing interest rates of commercial banks, which, we assume, are also subject to reserves requirements. We find that a steady state increase in monetary injections via increases in domestic credit leads to an increase in domestic output. On the other hand, we find that an increase in the steady state level of monetary transfers reduces the level of output.

Suggested Citation

Grilli, Vittorio and Roubini, Nouriel, Financial Intermediation and Monetary Policies in the World Economy (May 1991). NBER Working Paper No. t0104. Available at SSRN: https://ssrn.com/abstract=283337

Vittorio Grilli

Independent

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Nouriel Roubini (Contact Author)

New York University - Leonard N. Stern School of Business - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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United States

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