Seminar in Applied Economics: Martin Uribe

NOV 16, 2021 | 12:00 PM TO 1:45 PM

Professor Martin Uribe

Details

WHERE:

Zoom

WHEN:

November 16, 2021: 12:00 PM-1:45 PM

ADMISSION:

Free

SPONSOR:

Ph.D. in Economics

Description

Fall 2021 Seminar in Applied Economics will feature Martin Uribe. Professor Uribe will be presenting on “OPTIMAL BANK RESERVE REMUNERATION AND CAPITAL CONTROL POLICY" on November 16th at 12pm via zoom.  

Please feel free to register and attend the event using the zoom link below: 
https://gc-cuny.zoom.us/meeting/register/tJwsceyrqj8rGtWqgpyHquyHz1-SGyREU0hB

Please note: Students, faculty, staff, alumni, and others who participate in any of the following seminars with their camera on or use a profile image are agreeing to have their video or image recorded solely for the purpose of creating a record for participants in this seminar to refer to, including those enrolled students who are unable to attend live.  If you are unwilling to consent to have your profile or video image recorded, be sure to keep your camera off and do not use a profile image. Likewise, participants who un-mute during the seminar or class and participate orally are agreeing to have their voices recorded.  If you are not willing to consent to have your voice recorded, you will need to keep your mute button activated and communicate exclusively using the "chat" feature, which allows participants to type questions and comments live. ​

Abstract:
This paper studies optimal capital-control and bank-reserve remuneration policy in an open economy with a banking channel and a collateral constraint that limits household debt by a fraction of income. It finds that the unregulated economy borrows too little relative to what is optimal (underborrowing). This finding contrasts with the standard overborrowing result obtained in the absence of a banking channel. Under optimal policy, the central bank injects bank reserves during recessions. In this way, the monetary authority is able to uncouple household deleveraging from economy-wide deleveraging, thereby ameliorating the severity of the financial crisis. The paper documents that in emerging and developed economies the lending spread (lending rate minus deposit rate) displayed a muted response during the 2007-2009 financial crisis. This fact is consistent with a decline in the demand rather than in the supply of loans and gives credence to models in which the collateral constraint is placed at the level of the nonfinancial sector as opposed to at the level of the bank.