Time deposit supply in the Brunner-Meltzer model

In this paper we shoe that some critical statements by Friedman and Froewiss about the Brunner-Meltzer model, particularly regarding the supply of time deposits, are based on a misinterpretation of Brunner and Meltzer's money supply and credit supply process. Admittedly, the process of time deposit supply is not extensively dealt with in the discussions on the model. We try to bridge this gap to some extent by analyzing time deposit rate setting of profit-maximizing banks using the Brunner-Meltzer model.