This thesis studies the role of the banking system in several aspects of the macroeconomy, including the likelihood of financial crises, volatility of asset prices and the transmission of monetary policy. In chapter 2, I analyze the accumulation of international reserves by central banks as insurance against financial crises. In the model, private banks borrow from foreign creditors to invest in domestic projects. By lending to banks in response to liquidity shocks, the central bank can reduce the liquidation of bank assets and lower the probability of bank runs. I show that the central bank will hold more reserves when private banks hold lower reserves. I also find that if the central bank can borrow additional loans from external sources, then domestic banks will hold fewer reserves by themselves. If the borrowing cost of external loan is very high, then the central bank may actually want to accumulate more reserves in order to avoid borrowing from external sources at high costs. In chapter 3, I show that the ability of banks to supply liquidity through money creation is important for financial stability. By supplying liquidity, banks can smooth the sale of assets and stabilize asset prices. I find that without elastic money, the attempt of non-bank mutual funds to raise cash by selling assets will only add more volatility into the market. Elastic money provided by banks can help mutual funds better smooth the consumption of their shareholders. In chapter 4, we consider the role of elastic money in an different environment where liquidity shocks affect agents asymmetrically. We show how money growth and interest rate policy can be used to adjust the consumption level of households. We find that the optimal policy is affected by the sensitivity of the supply price to the interest rate. When the supply price is more sensitive to the interest rate, it would be better to adopt a higher inflation rate, and to make the zero-bound of nominal interest rate less likely to be binding. / Thesis (Ph.D, Economics) -- Queen's University, 2007-07-06 11:55:49.942

Submitted by Caio Teles (caio_act@hotmail.com) on 2018-01-27T15:39:08Z No. of bitstreams: 1 1-Artigo.pdf: 1265188 bytes, checksum: 5a2471a2292fc15d7036ab038945b20a (MD5) / Approved for entry into archive by GILSON ROCHA MIRANDA (gilson.miranda@fgv.br) on 2018-02-15T17:48:05Z (GMT) No. of bitstreams: 1 1-Artigo.pdf: 1265188 bytes, checksum: 5a2471a2292fc15d7036ab038945b20a (MD5) / Made available in DSpace on 2018-02-19T19:40:19Z (GMT). No. of bitstreams: 1 1-Artigo.pdf: 1265188 bytes, checksum: 5a2471a2292fc15d7036ab038945b20a (MD5) Previous issue date: 2017-08-14 / In this thesis, we use mechanism design approach in order to study economies in which optimal mechanism bears some resemblance to actual monetary system. More precisely, we study optimal monetary policy in models in which either: money is essential, or, money and bonds are coessential. In the first chapter, we study an optimal intervention in a model of outside money. Next, we extend the model to include bonds and interpret its role. Finaly, the last chapter we discuss the problems with the usual modeling aproach to monetary policy transition and its implications