Arbeitspapier

Federal Reserve Policy viewed through a Money Supply Loss

Federal Reserve nonborrowed reserve supply systematically responded to changes in inflation and in the output gap over the period 1969-2000. While the feedback from output gap is always negative, the response of money supply to changes in inflation varies considerably across time. Nonborrowed reserves decreased with inflation in the post-1979 period and increased in the pre-1979 period. Applying a standard macro-model, the estimated reaction functions are shown to ensure equilibrium determinacy. Viewed through the money supply lens, Federal Reserve policy substantially changed over time, but has never allowed for endogenous fluctuations, which contrasts conclusions drawn from federal funds rate analyses.

Language
Englisch

Bibliographic citation
Series: Tinbergen Institute Discussion Paper ; No. 08-023/2

Classification
Wirtschaft
Money Supply; Credit; Money Multipliers
Monetary Policy
Business Fluctuations; Cycles
Subject
Money supply
reaction functions
nonborrowed reserves
real-time data
equilibrium determinacy
Geldpolitik
Geldmenge
Schätzung
USA

Event
Geistige Schöpfung
(who)
Chowdhury, Ibrahim
Schabert, Andreas
Event
Veröffentlichung
(who)
Tinbergen Institute
(where)
Amsterdam and Rotterdam
(when)
2008

Handle
Last update
10.03.2025, 11:42 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Chowdhury, Ibrahim
  • Schabert, Andreas
  • Tinbergen Institute

Time of origin

  • 2008

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