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Reviewing the Efficacy of Federal Reserve Bank Reserve Policies through a Time Series Analysis of the Effective Federal Funds Rate

Author

Listed:
  • Dilpriya T. A. H.

    (Department of Computer Science and Software Engineering, Faculty of Computing, NSBM Green University Town, Pitipana – Thalagala Road, Homagama, Sri Lanka.)

  • Lanel G. H. J.

    (Department of Mathematics, Faculty of Applied Sciences, University of Sri Jayewardenepura, Gangodawila, Nugegoda, Sri Lanka.)

  • Perera M. T. M.

    (Department of Computer Science and Software Engineering, Faculty of Computing, NSBM Green University Town, Pitipana – Thalagala Road, Homagama, Sri Lanka.)

Abstract

The Effective Federal Funds Rate (EFFR) is a crucial interest rate that reflects the cost of banks borrowing funds from each other overnight. This rate is a significant indicator of the financial system’s health and stability in the United States. The rate values fluctuate due to various factors, such as changes in monetary policy, supply and demand for reserves, market expectations, events in financial markets, seasonal factors, and changes in regulations. Although it’s challenging to pinpoint the exact factors that cause the variation in this rate, the concepts of time series are employed to identify peak points of such changes. The resulting figures are obtained using R software, and the reviews corresponding to each EFFR value are parallel to the business market incidence in the USA. At the end of this paper, all the EFFR values from the year 2016 to 2021 are included, along with their corresponding reviews.

Suggested Citation

  • Dilpriya T. A. H. & Lanel G. H. J. & Perera M. T. M., 2023. "Reviewing the Efficacy of Federal Reserve Bank Reserve Policies through a Time Series Analysis of the Effective Federal Funds Rate," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(4), pages 869-880, April.
    • Handle: RePEc:bcp:journl:v:7:y:2023:i:4:p:869-880
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    References listed on IDEAS

    as
    1. Ben S. Bernanke, 2015. "The Federal Reserve and the Financial Crisis," Economics Books, Princeton University Press, edition 1, number 9928-2, December.
    2. Jeff W. Huther & Jane E. Ihrig & Elizabeth C. Klee, 2017. "The Federal Reserve's Portfolio and its Effect on Interest Rates," Finance and Economics Discussion Series 2017-075, Board of Governors of the Federal Reserve System (U.S.).
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