Afonso, Gara; Lagos, Ricardo - Federal Reserve Bank of New York - 2012
We develop a model of the market for federal funds that explicitly accounts for its two distinctive features: banks … repayment. The theory is used to answer a number of positive and normative questions: What are the determinants of the fed funds … rate? How does the market reallocate funds? Is the market able to achieve an efficient reallocation of funds? We also use …