Money, reserves, and the transmission of monetary policy¶
Carpenter, S., & Demiralp, S. (2012). Money, reserves, and the transmission of monetary policy: Does the money multiplier exist?. Journal of Macroeconomics.
Cited by¶
1 citation across 1 artifact.
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Domain-specific¶
- Money Multiplier
- Through successive rounds of quantitative easing the Federal Reserve expanded the monetary base (M0) roughly fourfold, yet broad money (M1, M2) grew far more modestly, so the observed M1/M0 multiplier fell sharply — for a period below 1, an arithmetic impossibility under the naive 1/r story
This sourceEstablishes that the textbook base-to-broad multiplier is not the transmission mechanism and that the post-2008 reserve expansion should not be expected to raise money or lending proportionately; the specific fourfold base figure and the below-1 M1/M0 ratio are not in this paper and need a data series.
Supported in partVerified against the source
- Through successive rounds of quantitative easing the Federal Reserve expanded the monetary base (M0) roughly fourfold, yet broad money (M1, M2) grew far more modestly, so the observed M1/M0 multiplier fell sharply — for a period below 1, an arithmetic impossibility under the naive 1/r story
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