The paper answers three questions.(1) Does it matter if a central bank suffers a large capital loss? (2) Can the central bank become insolvent? (3) When, how and by whom should the central bank be recapitalised?

Canada's Large Value Transfer System (LVTS) is in the process of being replaced by a real-time gross settlement (RTGS) system. A pure RTGS system typically requires participants to hold large amounts of intraday liquidity in order to settle their payment obligations. Implementing one or more...

Modern central banks increasingly value monetary policy transparency, and attempt to build credibility by communicating their decisions to the public. This paper studies whether the communication of central banks can be used to explain upcoming changes in their most important monetary policy...

Economic theory traditionally suggests that monetary policy can influence the business cycle, but not the long-run potential output. Despite well documented theoretical and empirical consensus on money neutrality in the literature, the role of money as an informational variable for monetary...

The successor to Keynesian economics was supply-side economics, which remains the core economic philosophy of the Republican Party. Its success wasn't only due to the attractiveness of tax cuts by politicians; a great deal of serious economic research underpinned the supply-side program, a point...

The downfall of Keynesian economics resulted from it being blamed for the inflation of the 1970s. In part this is because it had an inadequate theory of what caused inflation, having relied too heavily on the Phillips curve -- an idea found nowhere in Keynes' writings. In fact, Keynes was very...

This essay explains Keynesian economics as essentially an ex post rationale for policies Keynes thought were necessary to deal with deflation. In essence, he wanted inflation to compensate for deflation, but contrary to conservative dogma, Keynes was not a crude inflationist -- he wanted stable...

An increasing number of central banks implement monetary policy via two standing facilities: a lending facility and a deposit facility. In this paper we show that it is socially optimal to implement a non-zero interest rate spread. We prove this result in a dynamic general equilibrium model...

An increasing number of central banks implement monetary policy via two standing facilities: a lending facility and a deposit facility. In this paper we show that it is socially optimal to implement a non-zero interest rate spread. We prove this result in a dynamic general equilibrium model...