Mark: Interesting idea. But it would be expensive... and what's the benefit?

p.s. I'm hoping to contribute some of my thoughts regarding your crisis management topic later this week...
Kash | 04.18.05 - 12:49 pm | #

A good place to start is Woodford's book pages 24-37. He notes that Canada, Australia, and New Zealand already use such a channel system to some extent.

The benefits are that it avoids defining an aggregate, it's availalbe in countries without large financial sectors, and importantly it may increase the precision in controlling the federal funds rate.

I'm looking forward to your analysis!
Mark Thoma | Homepage | 04.18.05 - 12:57 pm | #