Interest on reserves, policy rules and quantitative easing

Edward Prescott

doi:10.1016/j.jedc.2014.09.013

Interest on reserves, policy rules and quantitative easing

Edward Prescott

WPC: Economics

Research output: Contribution to journal › Article › peer-review

Abstract

Hundred percent reserve transaction banking system is proposed with tax-free interest on demand deposits and interest bearing reserves. To eliminate shadow banking arrangements, a 100% tax on net interest income is proposed for limited liability businesses. All financing of businesses would be mutual as currently most is. With this arrangement there would be no bank runs associated giving rise to a financial crisis.

Original language	English (US)
Pages (from-to)	109-111
Number of pages	3
Journal	Journal of Economic Dynamics and Control
Volume	49
DOIs	https://doi.org/10.1016/j.jedc.2014.09.013
State	Published - Dec 1 2014

Keywords

100% Reserve banking
Monetary policy rules
Transaction banks

ASJC Scopus subject areas

Economics and Econometrics
Control and Optimization
Applied Mathematics

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10.1016/j.jedc.2014.09.013

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