Even Keel and the Great Inflation
Victoria Consolvo (),
Owen Humpage and
Sanchita Mukherjee ()
No 202033, Working Papers from Federal Reserve Bank of Cleveland
During the early part of the Great Inflation (1965-1975), the Federal Reserve undertook even-keel operations to assist the US Treasury’s coupon security sales. Accordingly, the central bank delayed any tightening of monetary policy and permanently injected reserves into the banking system. Using real-time Taylor-type and McCallum-like reaction functions, we show that the Fed routinely undertook these operations only when it was otherwise tightening monetary policy. Using a quantity-equation framework, we show that the Federal Reserve’s even-keel actions added approximately one percentage point to the overall 5.1 percent average annual inflation rate over these years.
Keywords: Even Keel; Great Inflation; Federal Reserve; US Treasury (search for similar items in EconPapers)
JEL-codes: E5 N1 F3 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-his, nep-hpe, nep-mac and nep-mon
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https://doi.org/10.26509/frbc-wp-202033 Full Text (text/html)
Working Paper: Even Keel and the Great Inflation (2015)
Working Paper: Even keel and the Great Inflation (2013)
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