Does the Federal Reserve Respond to Errant Money Growth? Evidence from Three Monetary Regimes

David R Hakes and Edward N Gamber

Journal of Money, Credit and Banking, 1992, vol. 24, issue 1, 127-34

Abstract: This paper tests the hypothesis that the Federal Reserve responds to deviations between actual and targeted money growth with a corrective adjustment in their policy instrument. The authors divide the sample period of 1975-87 into three monetary regimes. Their results suggest that the Fed responded to errant money growth in the pre-1979 and the 1979-82 subperiods. However, the authors find no evidence that the Fed responded to errant money growth in the post-1982 subperiod. These results yield some insights into the source of the "money supply announcement puzzle" by lending support for what has been termed the "policy anticipation effect." Copyright 1992 by Ohio State University Press.

Date: 1992
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Persistent link: https://EconPapers.repec.org/RePEc:mcb:jmoncb:v:24:y:1992:i:1:p:127-34

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