Akturk, Halit and Gocen, Hasan and Duran, Suleyman (2015): Money Multiplier under Reserve Option Mechanism.
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Abstract
This paper introduces a generalized money (M2) multiplier formula to the literature for a monetary system with Reserve Option Mechanism (ROM). Various features of the proposed multiplier are then explored using monthly Turkish data during the decade 2005 to 2015. We report a step increase in the magnitude and a slight upward adjustment in the long-run trend of the multiplier with the adoption of ROM. We provide evidence for substantial change in the seasonal pattern of the multiplier, cash ratio, required and excess reserves under ROM. We show that money (M2) multiplier is less volatile in a monetary system with ROM and discuss the subsequent stabilizing influence of more predictable multiplier on the foreign exchange market.
| Item Type: | MPRA Paper |
|---|---|
| Original Title: | Money Multiplier under Reserve Option Mechanism |
| English Title: | Money Multiplier under Reserve Option Mechanism |
| Language: | English |
| Keywords: | Money multiplier, macroprudential policy, reserve option mechanism, reserve requirements, financial stability |
| Subjects: | E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E51 - Money Supply ; Credit ; Money Multipliers E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies F - International Economics > F3 - International Finance > F31 - Foreign Exchange |
| Item ID: | 64803 |
| Depositing User: | Dr. Halit Aktürk |
| Date Deposited: | 05 Jun 2015 13:42 |
| Last Modified: | 26 Sep 2019 10:00 |
| References: | Alper, K., Binici, M., Demiralp, S., Kara, H., & Özlü P (2014). Reserve requirements, liquidity risk and credit growth. Ankara, the Central Bank of Republic of Turkey Working Paper No. 14/24. Alper, K., Kara, H., & Yorukoglu, M. (2013). Reserve options mechanism. Central Bank Review, 13, 1-14. Aslaner, O., Çıplak, U., Kara, H., & Küçüksaraç, D. (2014). Reserve option mechanism: Does it work as an automatic stabilizer? Ankara, the Central Bank of Republic of Turkey Working Paper No. 14/38. Değerli, A., & Fendoğlu, S. (2015). Reserve option mechanism as a stabilizing policy tool: evidence from exchange rate expectations. International Review of Economics and Finance, 35, 166-179. Federico P., Vegh, C. A., & Vuletin, G. (2014). Reserve requirement policy over the business cycle. Cambridge, NBER Working Paper No. 20612. Gallagher, K. P., & Tian, Y. (2014). Regulating capital flows in emerging markets: the IMF and the global financial crisis. Boston University - Global Economic Governance Initiative (GEGI) Working Paper, May (5). Jayaratne, J., & Morgan, D. P. (2000). Capital market frictions and deposit constraints at banks. Journal of Money, Credit and Banking, 32(1), 74-92. Küçüksaraç, D., & Özel, Ö. (2012). Reserve options mechanism and computation of reserve options coefficients, CBT Research Notes in Economics, 2012-33/07. Marvin, G. (1982). A model of money stock determination with loan demand and a banking system balance sheet constraint. FRB Richmond Economic Review, 68(1), 3-16. Oduncu, A., Akçelik, Y., & Ermişoğlu, E. (2013) Reserve options mechanism and FX volatility, Ankara, the Central Bank of Republic of Turkey Working Paper No. 13/03. The Central Bank of the Republic of Turkey (2010). Press release on required reserves. Retrieved from http://www.tcmb.gov.tr/wps/wcm/connect/a7fea09b-28c6-403b-982f-11b4d5eac9f4/ANO2010-41.pdf?MOD=AJPERES&CACHEID=a7fea09b-28c6-403b-982f-11b4d5eac9f4 |
| URI: | https://mpra.ub.uni-muenchen.de/id/eprint/64803 |
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