IDEAS home Printed from https://ideas.repec.org/p/udb/wpaper/uwec-2002-02.html

Why Were Changes in the Federal Funds Rate Smaller in the 1990s?

Author

Listed:
  • Arabinda Basistha

    (University of Washington)

  • Richard Startz

    (University of Washington)

Abstract

In this paper, we identify two major changes in the dynamics of the federal funds rate in the 1990s. We model the desired rate in a two-regime setting, one when the Fed makes no change and the other when the Fed is moving the desired rate to a new level. We find that the 1990s saw longer duration in the no-change regime as well as smaller changes in the other regime. We show the smaller changes were neither due to a less aggressive Fed nor due to lower volatility of the fundamentals. In fact, the Fed responded more aggressively to changes in fundamentals in the 1990s. The results also suggest that the Fed became more forward-looking in the last decade.

Suggested Citation

  • Arabinda Basistha & Richard Startz, 2002. "Why Were Changes in the Federal Funds Rate Smaller in the 1990s?," Working Papers UWEC-2002-02, University of Washington, Department of Economics.
    • Handle: RePEc:udb:wpaper:uwec-2002-02
    as

    Download full text from publisher

    File URL: http://www.econ.washington.edu/user/startz/Working_Papers/FederalFunds.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. is not listed on IDEAS
    2. Bennani, Hamza & Kranz, Tobias & Neuenkirch, Matthias, 2018. "Disagreement between FOMC members and the Fed’s staff: New insights based on a counterfactual interest rate," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 139-153.
    3. Arabinda Basistha & Richard Startz, 2022. "Monetary shock measurement and stock markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 54(2-3), pages 685-706, March.
    4. Hamza Bennani, 2016. "Measuring Monetary Policy Stress for Fed District Representatives," Scottish Journal of Political Economy, Scottish Economic Society, vol. 63(2), pages 156-176, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:udb:wpaper:uwec-2002-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael Goldblatt (email available below). General contact details of provider: https://edirc.repec.org/data/deuwaus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.