Federal Reserve Balance-Sheet Policy in an Ample Reserves Framework: An Inventory Approach
Abstract
Implementing monetary policy in an ample reserves regime means choosing a level of reserves that balances the cost of reserves against interest rate volatility. I use techniques from stochastic inventory theory to calibrate the size of the buffer needed to keep reserves above the ample level, and find the buffer size to be modest compared to the level of reserves needed to reach the ample level.
Fields of Study & Subjects
Monetary Policy and Economic Impact
Banking stability
regulation
efficiency
Economic theories and models
Publication details
- Journal / source
- Working paper
- Publication date
- 9 February 2026
- Language
- EN