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Journal Article
The link between M1 and the monetary base in the 198O's
Journal Article
Testing the expectations hypothesis: some new evidence for Japan
The deregulation of the Japanese financial markets and the adoption of an interest rate policy instrument by the Bank of Japan prompted a number of empirical investigations of the expectation hypothesis (EH) of the term structures of interest rates in Japan. This paper is a continuation of this research. It deviates from the previous work on the EH in Japan in two respects. First, it tests the EH by estimating a general vector autoregression (VAR) of the long-term and short-term rates and testing the restrictions implied by the EH on the VAR using a Lagrange multiplier test. Second, the issue ...
Journal Article
Is the FOMC’s policy inflating asset prices?
Keeping the policy rate significantly and persistently below "long-run equilibrium rates" may inflate asset prices.
Journal Article
Tests of the market's reaction to federal funds rate target changes
In this article, Daniel L. Thornton tests several hypotheses about the market's reactions to changes in the Federal Reserve's federal funds rate target. Thornton finds that short-term rates and long-term rates responded differently to funds rate target changes when target changes were accompanied by a change in the discount rate. He presents evidence that the smaller response of long-term rates (in these instances) is due to the market revising its inflation outlook when the target is changed. Thornton finds no evidence that the size of the market's response varies with the size of the target ...
Journal Article
The efficacy of monetary policy: a tale from two decades
Little difference in economic performance during the past two decades?is consistent with the theoretical and empirical evidence that monetary policy has no permanent effect on real variables.
Journal Article
Predictability and effectiveness of monetary policy
Journal Article
M1 or M2: which is the better monetary target?
Journal Article
The federal debt: what’s the source of the increase in spending?
The government increased payments to individuals without reducing spending elsewhere in the budget.