Is there any relationship between the monetary base and the interest rate of the US Federal Reserve?

Nancy Muller Durán () and Ignacio Perrotini Hernández
Additional contact information
Nancy Muller Durán: Universidad Nacional Autónoma de México, México
Ignacio Perrotini Hernández: Universidad Nacional Autónoma de México, México

Contaduría y Administración, 2018, vol. 63, issue 4, 43-44

Abstract: The present paper deals with the United States Federal Reserve (Fed) way of manipulating the interest rate (i) within a framework of endogenous supply of money, exogenous interest rate and inflation targeting. We argue that the Fed controls the monetary base (H) with the aim of adjusting the federal funds interest rate. In order to empirically support our hypothesis, an econometric analysis is conducted with data from the US economy for the period 1990-2017. It is shown that there is a long-run relationship between the fluctuations of both H and i. Furthermore, it is also shown that the volatility of H significantly affects the behavior of i. It appears that this issue has not been sufficiently discussed in the relevant literature, hence –we would like to stress- our results represent the main contribution of this study.

Keywords: Monetary base; Monetary supply; Interest rate; Inflation. (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.cya.unam.mx/index.php/cya/article/view/1905/1356 (application/pdf)

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: https://EconPapers.repec.org/RePEc:nax:conyad:v:63:y:2018:i:4:p:43-44

Access Statistics for this article

Contaduría y Administración is currently edited by Francisco López-Herrera (Editors in Chief)

More articles in Contaduría y Administración from Accounting and Management Contact information at EDIRC.
Bibliographic data for series maintained by Alberto García-Narvaez (Technical Editor) ().