Bank credit and money creation in a DSGE model of a small open economy
| Autor: | Tomas Ramanauskas, Jaunius Karmelavičius |
|---|---|
| Jazyk: | angličtina |
| Rok vydání: | 2019 |
| Předmět: |
Money creation
Financial intermediary Small open economy Pinigai. Valiuta / Money. Currency Monetary economics Bankai lcsh:K4430-4675 banks lcsh:HD72-88 financial intermediation lcsh:Economic growth development planning Bank credit Lietuva (Lithuania) Banks 0502 economics and business ddc:330 Economics Dynamic stochastic general equilibrium money creation credit supply deposits 050207 economics E51 lcsh:Public finance E30 Financial intermediation Kreditas. Paskolos / Credit Indėliai 050208 finance 05 social sciences Finansinis tarpininkavimas Political Science and International Relations E44 G21 Deposits General Economics Econometrics and Finance Credit supply |
| Zdroj: | Baltic journal of economics 2019, Vol. 19, no. 2, p. 296-333. Baltic journal of economics, Abingdon : Routledge journals, Taylor & Francis Group, 2019, vol. 19, iss. 2, p. 296-333 Baltic Journal of Economics, Vol 19, Iss 2, Pp 296-333 (2019) |
| ISSN: | 1406-099X 2334-4385 |
| Popis: | By the act of lending banks do not actually intermediate pre-accumulated real resources but rather create new financial resources in the form of deposits. Therefore, bank credit needs to be modelled as a monetary phenomenon, which directly fuels domestic demand and inflationary pressures. So far, there have been just a few attempts to model banks as monetary institutions in the DSGE model. In this paper we propose a simple DSGE model, which nevertheless accommodates banks as genuinely monetary institutions and captures banks' institutional ability to create money. Our model features a small open economy with nominal prices, savers and borrowers and a banking sector. Following an exogenously induced shock to banker's willingness to lend, the bank does not have to raise deposit rates or significantly increase borrowing from abroad as deposit dynamics closely resembles that of credit, which allows us to analyse real and nominal consequences of bank credit (and money) creation. |
| Databáze: | OpenAIRE |
| Externí odkaz: |
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