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Discount Window Borrowing And Federal Reserve Operating Regimes

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  • Pearce, Douglas K.

Abstract

Several researchers have argued that banks discount window borrowing behavior should change if the Federal Reserve changes its short-run targets for monetary policy. This paper explores this issue by estimating borrowing equations for periods in which the Federal Reserve alternatively targeted the Federal funds rate, nonborrowed reserves, or borrowed reserves. The effect of the switch from lagged to contemporaneous reserve accounting is also examined. The results, suggest that borrowing behavior did change with changes in operating procedures and reserve accounting procedures.

Suggested Citation

  • Pearce, Douglas K., 1990. "Discount Window Borrowing And Federal Reserve Operating Regimes," Department of Economics and Business - Archive 259457, North Carolina State University, Department of Economics.
    • Handle: RePEc:ags:ncbuar:259457
    DOI: 10.22004/ag.econ.259457
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    Cited by:

    1. Pavon-Prado, David, 2019. "Have we been measuring monetary policy correctly? Analysing the Federal Reserve’s policies over the last century," IFCS - Working Papers in Economic History.WH 28342, Universidad Carlos III de Madrid. Instituto Figuerola.
    2. Artuç, Erhan & Demiralp, Selva, 2010. "Discount window borrowing after 2003: The explicit reduction in implicit costs," Journal of Banking & Finance, Elsevier, vol. 34(4), pages 825-833, April.
    3. Dow, James Jr., 2001. "The Recent Behavior of Adjustment Credit at the Discount Window," Journal of Macroeconomics, Elsevier, vol. 23(2), pages 199-211, April.
    4. Kim, Iljoong & Kim, Inbae, 2007. "Endogenous selection of monetary institutions: With the case of discount windows and bureaucratic discretion," International Review of Law and Economics, Elsevier, vol. 27(3), pages 330-350, September.
    5. Pavon-Prado, David, 2022. "The cost of excess reserves and inflation in the United States during the last century," MPRA Paper 112797, University Library of Munich, Germany.
    6. Vilasuso, Jon, 1999. "The Liquidity Effect and the Operating Procedure of the Federal Reserve," Journal of Macroeconomics, Elsevier, vol. 21(3), pages 443-461, July.
    7. Tanner, J. Ernest & Pescatrice, Donn, 1998. "Was Monetary Policy Impotent or Simply Contracyclical in the 1980s?," Journal of Macroeconomics, Elsevier, vol. 20(1), pages 55-80, January.
    8. Dutkowsky, Donald H. & McCoskey, Suzanne K., 2001. "Near integration, bank reluctance, and discount window borrowing," Journal of Banking & Finance, Elsevier, vol. 25(6), pages 1013-1036, June.

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