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Title:Monetary Policy Implementation and the Federal Funds Rate PDF Logo
Authors:Nautz, Dieter
Schmidt, Sandra
Issue Date:2008
Series/Report no.:ZEW Discussion Papers 08-025
Abstract:This paper investigates how the implementation of monetary policy affects the dynamics and the volatility of the federal funds rate. Since the early 1980s, the most important changes in the Fed?s conduct of monetary policy refer to the role of the federal funds rate target and the reserve requirement system. We show that the improved communication and transparency regarding the federal funds rate target has significantly increased the Fed?s influence on the federal funds rate since 1994. By contrast, the declining role of required reserves in the U.S. has contributed to higher federal funds rate volatility. Our results suggest that the planned introduction of remunerated reserves will further enhance the controllability of the federal funds rate.
Subjects:Dynamics and Volatility of the Federal Funds Rate
Monetary Policy Implementation
Central Bank Communication
Reserve Requirements
JEL:C22
E52
E43
Document Type:Working Paper
Appears in Collections:ZEW Discussion Papers
Publikationen von Forscherinnen und Forschern des ZEW

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