Date of Award
1-1-2024
Document Type
Dissertation
Degree Name
Ph.D. in Economics
First Advisor
Joshua Hendrickson
Second Advisor
John Conlon
Third Advisor
Kenneth Rich
School
University of Mississippi
Relational Format
dissertation/thesis
Abstract
This dissertation examines the implications of monetary policy in two interconnected frameworks. The first chapter investigates the impact of paying interest on reserves on the effectiveness of open market operations via the portfolio balance channel. Using a structural vector autoregression (SVAR) model, I find that responses of output and price levels are muted and uncertain in the post-interest-on-reserves regime, suggesting that open market operations have become less effective in transmitting monetary policy. A corollary to this is that the portfolio balance channel may have been sufficiently weakened after the introduction of interest on reserves policy. The second chapter revisits Alchian and Klein's (1973) work on the importance of considering both service flows and asset prices in analyzing the effects of monetary policy. Extending their data and using modern econometric techniques, I find that traditional price indices fail to capture short-term changes in asset prices, which represent claims to future consumption. This leads to an underestimation of real money demand and a biased impact of monetary policy. Thus, more attention must be given to constructing a price index that includes claims to future consumption.
Recommended Citation
Agyeman-Duodu, David, "Essays on Monetary Policy and Financial Frictions" (2024). Electronic Theses and Dissertations. 2907.
https://egrove.olemiss.edu/etd/2907