Munich Personal RePEc Archive

The evolving role and definition of the federal funds rate in the conduct of U.S. monetary policy

Belongia, Michael and Hinich, Melvin (2009): The evolving role and definition of the federal funds rate in the conduct of U.S. monetary policy.

[img]
Preview
PDF
MPRA_paper_18970.pdf

Download (228kB) | Preview

Abstract

Over the past twenty years, the federal funds rate has evolved from being an intermediate target or indicator variable in discussions of monetary policy to the Federal Reserve’s (exogenous) policy instrument. How the funds rate is characterized has important implications for modeling, particularly in settings such as the popular Taylor Rule. Crucially, however, little investigation has been done to examine whether the funds rate meets the conditions one would require for an instrument of policy. This paper offers empirical evidence on the relationships among the federal funds rate, variables that might influence its behavior and variables of interest to monetary policy.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.