Interest-rate smoothing and optimal monetary policy: a review of recent empirical evidence

Article Abstract:

Interest-rate smoothing carried out by the Federal Reserve could be an optimal policy.

Central banks

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Political pressures and the choice of the optimal monetary policy instrument

Article Abstract:

A monetary policy model is examined which uses an endogenous money quantity and interest rates or bank reserves used as policy instruments.

Bank reserves

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Interest rate risk subsidization in international capital standards

Article Abstract:

The effect of the Basle Accord on the risk-behavior of banks was examined. The Accord was signed in July 1988 by industrial countries which were members of the Basle Committee on Banking Supervision. Two main issues were studied. The first was the empirical verification of an interest rate risk (IRR) subsidy and second was the changes in risk-taking behavior due to risk adjustments resulting from the Basle capital regulations. It was discovered that the majority of large US banks did not take advantage of the IRR subsidy. Those who did have high levels of IRR risk substituted this risk with credit risk.

Research, Banking industry, Risk (Economics), Risk management, Bank capital

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