Instrument Choice for Money Stock Control with Contemporaneous and Lagged Reserve Requirements.

The article provides information on a paper which discusses instrument choice for money stock control with contemporaneous and lagged reserve requirements. The authors suggest that the paper examined is the first to utilize a model which treats output and prices as endogenous and that incorporates rational expectations. The article discusses the importance of distinguishing between banking systems with contemporaneous reserve requirement (CRR) and lagged reserve requirements (LRR). The authors explain that this is important because monetary control is usually poorer with LRR than with CRR. Several equations are presented to help illustrate the study.