Goodhart, Charles, Sunirand, P. and Tsomocos, D. P. (2009) The optimal monetary instrument for prudential purposes. Journal of Financial Stability, 7 (2). pp. 70-77. ISSN 1572-3089
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Identification Number: 10.1016/j.jfs.2009.06.002
Abstract
The purpose of this paper is to assess the choice between adopting a monetary base or an interest rate setting instrument to maintain financial stability. Our results suggest that the interest rate instrument is preferable, since during times of a panic or financial crisis the Central Bank automatically satisfies the increased demand for money. Thus, it prevents sharp losses in asset values and enhanced asset volatility.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.sciencedirect.com/science/journal/15723... |
| Divisions: | Financial Markets Group |
| Subjects: | H Social Sciences > HG Finance |
| Date Deposited: | 06 Apr 2011 15:12 |
| Last Modified: | 22 Oct 2024 19:36 |
| URI: | http://eprints.lse.ac.uk/id/eprint/30264 |
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