Martin, Antoine; McAndrews, James; Skeie, David - Federal Reserve Bank of New York - 2011
such a large quantity of bank reserves could lead to overly expansive bank lending as the economy recovers, regardless of … the Federal Reserve’s interest rate policy. In contrast, we show that the size of bank reserves has no effect on bank … lending in a frictionless model of the current banking system, in which interest is paid on reserves and there are no binding …