The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve
The founding of the Federal Reserve System in 1914 led to a substantial change in the behavior of nominal interest rates. The authors examine the timing of this change and the speed with which it was effected. They then use data on the term structure of interest rates to determine how expectations responded. Their results indicate that the change in policy regime was rapid and that individuals quickly understood the new environment they were facing. Copyright 1987 by American Economic Association.
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Volume (Year): 77 (1987)
Issue (Month): 3 (June)
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- Richard H. Clarida & Benjamin M. Friedman, 1983. "Why Have Short-Term Interest Rates Been So High?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 14(2), pages 553-586.
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- Taylor, John B, 1975. "Monetary Policy during a Transition to Rational Expectations," Journal of Political Economy, University of Chicago Press, vol. 83(5), pages 1009-1021, October. Full references (including those not matched with items on IDEAS)
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