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Article: The information content of the federal funds rate: is it unique?
- Article from:
- Journal of Money, Credit & Banking
- Article date:
- August 1, 1995
- Author:
CopyrightCOPYRIGHT 1995 Ohio State University Press. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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FOR SOME TIME NOW, market analysts and central bankers have relied on interbank loan rates in formulating and evaluating monetary policy. Research aimed at identifying the effects of U.S. monetary policy on economic activity (for example, Bernanke 1990, Bernanke and Blinder 1992, and Kashyap, Stein, and Wilcox 1993) has recently turned to the fund rate as an indicator of (exogenous) monetary policy. To the extent that movements in the federal funds rate reflect policy-induced changes in the supply of reserves rather than changes in demand, movements in the rate can be used as a proxy for Federal Reserve policy. Indeed, by virtue of the Federal Reserve's apparent inclination ...