Title of article
The mechanicsofagracefulexit:Interestonreservesand segmentationinthefederalfundsmarket
Author/Authors
Morten L. Bech، نويسنده ,
Issue Information
روزنامه با شماره پیاپی سال 2011
Pages
17
From page
415
To page
431
Abstract
To combatthefinancialcrisisthatintensifiedinthefallof2008,theFederalReserveinjected
a substantialamountofliquidityintothebankingsystem.Theresultingincreaseinreserve
balancesexerteddownwardpricepressureinthefederalfundsmarket,andtheeffective
federalfundsratebegantodeviatefromthetargetratesetbytheFederalOpenMarket
Committee.Inresponse,theFederalReservereviseditsoperationalframeworkfor
implementingmonetarypolicyandbegantopayinterestonreservebalancesinanattempt
to provideafloorforthefederalfundsrate.Nevertheless,followingthepolicychange,the
effectivefederalfundsrateremainedbelownotonlythetargetbutalsotheratepaidon
reservebalances.Wedevelopamodeltoexplainthisphenomenonandusedatafromthe
federalfundsmarkettoevaluateitempirically.Inturn,weshowhowsuccessfultheFederal
Reservemaybeinraisingthefederalfundsrateeveninanenvironmentwithsubstantial
reservebalances.
Journal title
Journal of Monetary Economics
Serial Year
2011
Journal title
Journal of Monetary Economics
Record number
846480
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