Publication: The liquidity effect in the federal funds market: Evidence at the monthly frequency
Program
KU-Authors
KU Authors
Co-Authors
Carpenter, Seth
Publication Date
Language
Type
Embargo Status
Journal Title
Journal ISSN
Volume Title
Alternative Title
Abstract
In this paper, we argue that much of the research into the link between money and interest rates suffers from misspecification. The measure of money and the measure of interest rates are not always well matched. In examining the transmission of monetary policy, we show that using an appropriate measure of money, Federal Reserve balances, and the appropriate interest rate, the federal funds rate, a clear liquidity effect exists. Furthermore, we explain how a lack of a clear institutional understanding may have contributed to the finding of a "liquidity puzzle" in the past.
Source
Publisher
Wiley-Blackwell
Subject
Business, Finance, Economics
Citation
Has Part
Source
Journal of Money Credit and Banking
Book Series Title
Edition
DOI
10.1111/j.1538-4616.2008.00102.x