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The relationship between the federal funds rate and the Fed's federal funds rate target: is it open market or open mouth operations?

Thornton, Daniel L. - Deutsche Bundesbank - 2000

It is widely believed that the Fed controls the funds rate by altering the degree of pressure in the reserve market through open market operations when it changes its target for the federal funds rate. Recently, however, several economists have suggested that open market operations may not be...

Persistent link: https://www.econbiz.de/10005083145

Interbank lending and monetary policy transmission: evidence for Germany

Ehrmann, Michael; Worms, Andreas - Deutsche Bundesbank - 2001

This paper presents empirical evidence on the behaviour of interbank lending in Germany after a monetary policy impulse. Our VAR analysis shows that following a monetary contraction, the banking system as a whole attracts additional funds from foreign banks. Whereas small cooperative and savings...

Persistent link: https://www.econbiz.de/10005083202

Inflation persistence and price-setting behaviour in the euro area : a summary of the Inflation Persistence Network evidence

Altissimo, Filippo; Ehrmann, Michael; Smets, Frank - Nationale Bank van België/Banque national de Belqique (BNB) - 2006

This paper provides a summary of current knowledge on inflation persistence and price stickiness in the euro area, based on research findings that have been produced in the context of the Inflation Persistence Network. The main findings are: i) Under the current monetary policy regime, the...

Persistent link: https://www.econbiz.de/10005060038

The reception of public signals in financial markets - what if central bank communication becomes stale?

Ehrmann, Michael; Sondermann, David - European Central Bank - 2009

How do financial markets price new information? This paper analyzes price setting at the intersection of private and public information, by testing whether and how the reaction of financial markets to public signals depends on the relative importance of private information in agents’...

Persistent link: https://www.econbiz.de/10005068625

Taking stock: monetary policy transmission to equity markets

Ehrmann, Michael; Fratzscher, Marcel - European Central Bank - 2004

This paper analyses the effects of US monetary policy on stock markets. We find that, on average, a tightening of 50 basis points reduces returns by about 3%. Moreover, returns react more strongly when no change had been expected, when there is a directional change in the monetary policy stance...

Persistent link: https://www.econbiz.de/10005070377

The identification of the response of interest rates to monetary policy actions using market-based measures of monetary policy shocks

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2009

It is common practice to estimate the response of asset prices to monetary policy actions using market-based measures of monetary policy shocks, such as the federal funds futures rate. I show that because interest rates and market-based measures of monetary policy shocks respond simultaneously...

Persistent link: https://www.econbiz.de/10005077869

How did we get to inflation targeting and where do we go now? a perspective from the U.S. experience

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2009

This paper advances the hypothesis that the transition from there-is-little-central-banks-can-do-to-control-inflation to inflation targeting occurred because central banks, especially the Federal Reserve, demonstrated that central banks can control inflation rather than a consequence of marked...

Persistent link: https://www.econbiz.de/10005077875

The daily and policy-relevant liquidity effects

Thornton, Daniel L. - European Central Bank - 2008

The phrase “liquidity effect” was introduced by Milton Friedman (1969) to describe the first of three effects on … interest rates caused by an exogenous change in the money supply. The lack of empirical support for the liquidity effect using … evidence of the liquidity effect could be obtained using daily data – the daily liquidity effect. This paper investigates the …

Persistent link: https://www.econbiz.de/10005079103

Monetary policy: why money matters and interest rates don't

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 2008

Monetary policy is now conducted by targeting a very short-term interest rate. The Fed and other central banks attempt to control the price level by manipulating aggregate demand by adjusting their interest rate target. At best, money's role is tertiary. Indeed, a few prominent and influential...

Persistent link: https://www.econbiz.de/10005707745

Unanticipated money and the anticipated liquidity effect: some further evidence

Thornton, Daniel L. - Federal Reserve Bank of St. Louis - 1987

as evidence in support of the so-called "anticipated liquidity effect." This paper employs an alternative methodology to … anticipated liquidity effect …

Persistent link: https://www.econbiz.de/10005707757