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Working Paper
A Macroeconomic Model of Central Bank Digital Currency
Paul, Pascal; Ulate, Mauricio; Wu, Jing Cynthia (2025-06-25)
We develop a quantitative New Keynesian DSGE model with monopolistic banks to study the macroeconomic effects of introducing a central bank digital currency (CBDC). Households benefit from an expansion of liquidity services and higher deposit rates as bank deposit market power is curtailed, while bank profitability and lending decline. We assess this trade-off for a wide range of economies that differ in their level of interest rates. We find substantial welfare gains from introducing a CBDC with an optimal rate that can be approximated by a simple rule of thumb: the maximum between 0% and ...
Working Paper Series , Paper 2024-11

Report
The 2016 and 2017 Surveys of Consumer Payment Choice: Technical Appendix
Foster, Kevin; Angrisani, Marco; Hitczenko, Marcin (2020-04-01)
This document serves as the technical appendix to the 2016 and 2017 Surveys of Consumer Payment Choice administered by the Dornsife Center for Economic and Social Research (CESR). The Survey of Consumer Payment Choice (SCPC) is an annual study designed primarily to collect data on attitudes toward and use of various payment instruments by consumers over the age of 18 in the United States. The main report, which introduces the survey and discusses the principal economic results, is on our website at frbatlanta.org/banking-and-payments/consumer-payments/survey-of-consumer-payment-choice. In ...
Consumer Payments Research Data Reports , Paper 2018-4

Report
The 2013 Survey of Consumer Payment Choice: Technical Appendix
Angrisani, Marco; Foster, Kevin; Hitczenko, Marcin (2015-07-01)
This report serves as the technical appendix to the 2013 Survey of Consumer Payment Choice. The Survey of Consumer Payment Choice (SCPC) is an annual study, conducted since 2008 through a partnership between the Consumer Payments Research Center (CPRC) at the Federal Reserve Bank of Boston and the RAND Corporation, designed primarily to collect data on attitudes to and use of various payment instruments by consumers over the age of 18 in the United States. The main report, which introduces the survey and discusses the principal economic results, can be found here. This data report details the ...
Consumer Payments Research Data Reports , Paper 2015-05

Working Paper
Keynesian inefficiency and optimal policy: a new monetarist approach
Williamson, Stephen D. (2014-03-01)
A simple model of monetary/labor search is constructed to study Keynesian indeterminacy and optimal policy. In the model, economic agents have trouble splitting the surplus from exchange appropriately, and we consider monetary and fiscal policies that correct this Keynesian inefficiency. A Taylor rule does not imply determinacy, nor does it support an efficient outcome, in general. Optimal policies yield an efficient and determinate allocation of resources, but equilibrium policy actions, wages, and prices are indeterminate at the optimum.
Working Papers , Paper 2014-9

Working Paper
Bargaining Power and Outside Options in the Interbank Lending Market
Abbassi, Puriya; Bräuning, Falk; Schulze, Niels (2020-06-01)
We study the role of bargaining power and outside options with respect to the pricing of over-the-counter interbank loans using a bilateral Nash bargaining model, and we test the model predictions with detailed transaction-level data from the euro-area interbank market. We find that lender banks with greater bargaining power over their borrowers charge higher interest rates, while the lack of alternative investment opportunities for lenders lowers bilateral interest rates. Moreover, we find that when lenders that are not eligible to earn interest on excess reserves (IOER) lend funds to ...
Working Papers , Paper 20-10

Report
Fragility of Safe Asset Markets
Phelan, Gregory; Eisenbach, Thomas M. (2022-07-01)
In March 2020, safe asset markets experienced surprising and unprecedented price crashes. We explain how strategic investor behavior can create such market fragility in a model with investors valuing safety, investors valuing liquidity, and constrained dealers. While safety investors and liquidity investors can interact symbiotically with offsetting trades in times of stress, liquidity investors’ strategic interaction harbors the potential for self-fulfilling fragility. When the market is fragile, standard flight-to-safety can have a destabilizing effect and trigger a “dash-for-cash” by ...
Staff Reports , Paper 1026

Working Paper
Employment Effects of Unconventional Monetary Policy : Evidence from QE
Zimmermann, Thomas; Luck, Stephan (2018-10-24)
This paper investigates the effect of the Federal Reserve's unconventional monetary policy on employment via a bank lending channel. We find that banks with higher mortgage-backed securities holdings issued relatively more loans after the first and third rounds of quantitative easing (QE1 and QE3). While additional volume is concentrated in refinanced mortgages after QE1, increases are driven by newly originated home purchase mortgages and additional commercial and industrial lending after QE3. Using spatial variation, we show that regions with a high share of affected banks experienced ...
Finance and Economics Discussion Series , Paper 2018-071

Working Paper
Cash-in-the-Market Pricing in a Model with Money and Over-the-Counter Financial Markets
Nosal, Ed; Mattesini, Fabrizio (2011-11-13)
Entrepreneurs need cash to finance their real investments. Since cash is costly to hold, entrepreneurs will underinvest. If entrepreneurs can access financial markets prior to learning about an investment opportunity, they can sell some of their less liquid assets for cash and, as a result, invest at a higher level. When financial markets are over-the-counter, the price that the entrepreneur receives for the assets that he sells depends on the amount of liquidity (cash) that is in the OTC market: Greater levels of liquidity lead to higher asset prices. Since asset prices are linked to ...
Working Paper Series , Paper WP-2013-24

Working Paper
Institutional quality, the cyclicality of monetary policy and macroeconomic volatility
Duncan, Roberto (2013-12-31)
In contrast to industrialized countries, emerging market economies are characterized by proor acyclical monetary policies and high output volatility. This paper argues that those facts can be related to a long-run feature of the economy - namely, its institutional quality (IQL). The paper presents evidence that supports the link between an index of IQL (law and order, government stability, investment profile, etc.), and (i) the cyclicality of monetary policy, and (ii) the volatilities of output and the nominal interest rate. In a DSGE model, foreign investors that choose a portfolio of direct ...
Globalization Institute Working Papers , Paper 163

Working Paper
A Comparison of Fed "Tightening" Episodes since the 1980s
Kliesen, Kevin L. (2020-01-30)
Deciding to undertake a series of tightening actions present unique challenges for Federal Reserve policymakers. These challenges are both political and economic. Using a variety of economic and financial market metrics, this article examines how the economy and financial markets evolved in response to the five tightening episodes enacted by the FOMC since 1983. The primary aim is to compare the most-recent episode, from December 2015 to December 2018, with the previous four episodes. The findings in this article indicate that the current episode bears some resemblance to previous Fed ...
Working Papers , Paper 2020-003

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