Year of Graduation
Monetary Policy with Interest on Reserves in FTPL
I analyze monetary policy with interest on reserves. I base the analysis on the fiscal thoery of price level. I explain why FTPL is unique theory for analyse the inflation rate in modern macroeconomic models. I give some explanations of conducting monetary policy, when monetary authorities target interest rate and pay interest on reserves. I test models with different specifications. In my paper I analyze simple dynamic model, new Keynesian model and hybrid model. All of these models are analyzed by two preconditions: monetary and fiscal dominance. The results should have immediate practical implications related to the effectiveness of monetary policy under the interest on reserves.