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Multiplier misconceptions (Econlib, 4 min read) Money multiplier models taught in the textbook are not as useful as they change over time. Before 2008 the interest rate was controlled by adjusting the number of reserves. Today, it also includes adjusting the interest rate paid on reserves.
Data Needs for Shutdown Policy (VoxEU, 5 min) To decide when to ease lockdown would require calculation on how widespread the virus is. Current testing for the virus is focused on those showing severe symptoms or at high risk due to resource constraints. One potential solution – random testing of the population to identify the true infection rate.
Repo market and leverage ratio in the euro area ( Banca D’ ITALIA, 17-page read) New evidence on the effect of the leverage ratio (LR) on repo market activity in the euro area. Banks are found to exert market power towards non-bank financial institutions by applying lower rates and larger bid-ask spreads.LR is not a significant factor in the widening of bid-ask spreads. This evidence lessens the concern of additional LR reporting and disclosure requirements.