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Local Monetary Policy

Author

Listed:
  • Fos, Vyacheslav
  • Tamburelli, Tommaso
  • Xu, Nancy

Abstract

When Federal Reserve districts experience high inflation or low unemployment but lack voting rights to influence FOMC decisions, credit extended to commercial banks through the Discount Window (DW) declines. Our identification strategy is based on the exogenous rotation of voting rights among Reserve Banks and on within borrower-time and district-time variation in DW loans and Federal Home Loan Bank (FHLB) loans, implying that factors related to changes in macroeconomic conditions, local credit demand, or borrower characteristics do not drive the results. The effect on bank funding sources translates into changes in the composition of loans extended by commercial banks.

Suggested Citation

  • Fos, Vyacheslav & Tamburelli, Tommaso & Xu, Nancy, 2025. "Local Monetary Policy," CEPR Discussion Papers 20312, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:20312
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    File URL: https://cepr.org/publications/DP20312
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    More about this item

    JEL classification:

    • E5 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • D7 - Microeconomics - - Analysis of Collective Decision-Making

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