The Liquidity Effect in the Federal Funds Market: Evidence at the Monthly Frequency

Seth Carpenter and Selva Demiralp

Journal of Money, Credit and Banking, 2008, vol. 40, issue 1, pages 1-24

Abstract: In this paper, we argue that much of the research into the link between money and interest rates suffers from misspecification. The measure of money and the measure of interest rates are not always well matched. In examining the transmission of monetary policy, we show that using an appropriate measure of money, Federal Reserve balances, and the appropriate interest rate, the federal funds rate, a clear liquidity effect exists. Furthermore, we explain how a lack of a clear institutional understanding may have contributed to the finding of a "liquidity puzzle" in the past. Copyright 2008 The Ohio State University.

Date: 2008
View citations in EconPapers

Downloads: (external link)
http://www.blackwell-synergy.com/doi/abs/10.1111/j.1538-4616.2008.00102.x link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:mcb:jmoncb:v:40:y:2008:i:1:p:1-24

Access Statistics for this article

Journal of Money, Credit and Banking is edited by Pok-Sang Lam, Deborah Lucas, Masao Ogaki and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Series data maintained by Christopher F. Baum ().