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Working Paper
The effect of monetary policy actions on exchange rates under interest-rate targeting
One puzzling feature of recent empirical studies of the effects of monetary policy changes on exchange rates is the result that the exchange rate does not adjust immediately to the policy shock. Instead, these studies find that it can take as long as two years for the exchange rate to fully reflect the policy change. In this paper, a model of the exchange-rate response to U.S. monetary policy actions which captures these results is specified. This model is also capable of generating standard overshooting results. The authors show that the response pattern of spot and expected future exchange ...
Journal Article
Monetary policy actions and long-term interest rates
It is generally believed that monetary policy actions are transmitted to the economy through their effect on market interest rates. According to this standard view, a restrictive monetary policy by the Federal Reserve pushes up both short-term and long-term interest rates, leading to less spending by interest-sensitive sectors of the economy such as housing, consumer durable goods, and business fixed investment. Conversely, an easier policy results in lower interest rates that stimulate economic activity. Unfortunately, empirical studies and the observed behavior of interest rates appear to ...
Working Paper
Are Japanese interest rates too stable?
Journal Article
Federal debt management policy: a re-examination of the issues
Working Paper
Monetary actions, intervention, and exchange rates : a re-examination of the empirical relationships using federal funds rate target data
The results of recent empirical studies on the relationships among Federal Reserve monetary-policy actions, U.S. interventions in currency markets, and exchange rates are re-examined. Changes in the Federal Reserve's federal funds rate target as measure of monetary-policy actions are used. Then the relations using federal funds rate target changes only in periods in which the Federal Reserve used the federal funds rate to implement monetary policy are estimated. The results suggest that the immediate responses of exchange rates to U.S. monetary policy actions are statistically and ...