Score contribution per author:
α: calibrated so average coauthorship-adjusted count equals average raw count
A two-sector general equilibrium banking model is constructed to study the functioning of a floor system of central bank intervention. Only retail banks can hold reserves, and these banks are subject to a capital requirement, creating “balance sheet costs” of holding reserves. An increase in the interest rate on reserves has different qualitative effects from a reduction in the central bank’s balance sheet. Increases in the central bank’s balance sheet can have redistributive effects, and can reduce welfare. A reverse repo facility at the central bank puts a floor under the interbank interest rate, and is always welfare improving.