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PORTFOLIOS WITH RESERVE COEFFICIENT
Author(s) -
LeBlanc Gerald,
Moeseke Paul
Publication year - 1979
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/j.1467-999x.1979.tb00238.x
Subject(s) - economics , interest rate , portfolio , monetary policy , econometrics , open market operation , coherence (philosophical gambling strategy) , mathematical economics , monetary economics , financial economics , mathematics , statistics
This article offers an attempt at defining and computing the coherence of, and substitution among, the standard instruments of monetary policy, viz. open market policy, rate of interest, and reserve coefficient. A number of separation theorems are proved and a unit‐elasticity rule derived for the tradeoff between the reserve coefficient and the premium on risky assets. Finally, for any given interest rate we select an optimal portfolio by the maximal‐caution criterion, which minimizes the probability of failure.