Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/100822
Authors: 
Espinosa-Vega, Marco
Russell, Steven
Year of Publication: 
1998
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 98-1
Abstract: 
This paper analyzes multiple reserve requirements of the type that have been imposed by a number of developing countries. We show that previous theoretical work on this topic has not succeeded in providing a social welfare rationale for the existence of multiple reserve requirements: in the basic reserve requirements model, any allocation that can be supported by a multiple-reserves regime can also be supported by a single-bond reserve requirement. We go on to present extended versions of the model in which it is possible for a multiple-reserves regime to improve social welfare relative to any single-reserve (currency or bond) and/or deposit-tax regime. We demonstrate the empirical plausibility of our approach by providing a case study of Mexico, a country with extensive historical experience with multiple reserve requirements
Subjects: 
Developing countries
Finance
Public
Document Type: 
Working Paper

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