I would like to thank two anonymous referees and Akihisa Shibata for their helpful comments and suggestions. Of course, all errors are mine. This study is financially supported by the research fellowships of the Japan Society for the Promotion of Science for young scientists.
Monetary Policy and Banking Structure
Version of Record online: 16 AUG 2011
© 2011 The Ohio State University
Journal of Money, Credit and Banking
Volume 43, Issue 6, pages 1109–1129, September 2011
How to Cite
MATSUOKA, T. (2011), Monetary Policy and Banking Structure. Journal of Money, Credit and Banking, 43: 1109–1129. doi: 10.1111/j.1538-4616.2011.00419.x
- Issue online: 16 AUG 2011
- Version of Record online: 16 AUG 2011
- Received October 22, 2009; and accepted in revised form Accepted February 18, 2011.
- overlapping generations;
- spatial separation;
- competitive banks;
- monopoly bank;
- Friedman rule;
- discount window
In this paper, I examine the differences in optimal monetary policy in various banking systems. In particular, I compare two monetary economies: one with a competitive banking system and the other with a monopolistic one. In addition, the optimality of the discount window policy is considered. It is shown that the Friedman rule is the optimal monetary policy in a monopolistic banking economy, and the zero-inflation policy is optimal in a competitive banking economy under appropriate parameters. In addition, the combination of the Friedman rule and the discount window policy can achieve efficient allocation in both banking systems.