Brian C Jenkins | Research


Summary

My research interests are in macroeconomics, business cycle modeling, monetary policy, and banking. In my dissertation, I developed a theoretical business cycle model to explore the link between banker preferences for risk and the extent to which excess reserves fluctuate with the business cycle. I found that when banks are more risk averse, then they are also more likely to hold excess reserves as a way to reduce the variability of their overall asset portfolios.

Currently, I have a paper that is in the submission process: Risk Averse Banks and Excess Reserve Fluctuations. The project is joint with Michael K. Salemi at UNC, Chapel Hill. In our paper we show that when banks are risk averse, an unanticipated shock to the risk on loan portfolios is sufficient to lead banks to lend less and to hold more excess reserves. Our results suggest that risk aversion among banks was an important driver of the massive build-up of excess reserves in the US banking system from mid-September and early October 2008.

I have a strong interest in studying the optimal use of interest on reserves as an active component of central bank policy. In my current work in progress — Optimal Monetary and Regulatory Policy With Interest On Reserves — I incorporate Jeremy Stein's model of firesales from his 2012 QJE paper into a larger-scale new-Keynesian style business cycle model. My objective is to characterize the optimal joint setting of interest on reserves and interest on bonds in an environment where the interest rate on reserves can be used to encourage or discourage lending activities.


Research Projects