Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/144852
Authors: 
Homburg, Stefan
Year of Publication: 
2016
Series/Report no.: 
Hannover Economic Papers (HEP) 578
Abstract: 
While the target federal funds rate represents a policy instrument, the effective federal funds rate is determined in a competitive interbank market. The paper proposes a theory of its determination. This yields a specific term structure of interest rates, an account of why the money multiplier approach failed, and a demonstration that interest on reserves does not change bank incentives.
Subjects: 
federal funds rate
term structure of interest rates
excess reserves
money multiplier
zero lower bound
JEL: 
E43
E51
E58
G01
Document Type: 
Working Paper

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