Trade Dynamics in the Market for Federal Funds

Gara Afonso and Ricardo Lagos

Econometrica, 2015, vol. 83, 263-313

Abstract: We develop a model of the market for federal funds that explicitly accounts for its two distinctive features: banks have to search for a suitable counterparty, and once they meet, both parties negotiate the size of the loan and the repayment. The theory is used to answer a number of positive and normative questions: What are the determinants of the fed funds rate? How does the market reallocate funds? Is the market able to achieve an efficient reallocation of funds? We also use the model for theoretical and quantitative analyses of policy issues facing modern central banks.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (185)

Downloads: (external link)
http://hdl.handle.net/

Related works:
Working Paper: Trade Dynamics in the Market for Federal Funds (2014)
Working Paper: Trade Dynamics in the Market for Federal Funds (2014)
Working Paper: Trade dynamics in the market for federal funds (2012)
Working Paper: Trade Dynamics in the Market for Federal Funds (2011)
Working Paper: Trade Dynamics in the Market for Federal Funds (2010)
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:wly:emetrp:v:83:y:2015:i::p:263-313

Ordering information: This journal article can be ordered from
https://www.economet ... ordering-back-issues

Access Statistics for this article

Econometrica is currently edited by Guido W. Imbens

More articles in Econometrica from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().