“Unconventional” Monetary Policy as Conventional Monetary Policy: A Perspective from the U.S. in the 1920s

Mark Carlson and Burcu Duygan-Bump
Additional contact information
Burcu Duygan-Bump: https://www.federalreserve.gov/econres/burcu-duygan-bump.htm

No 2018-019, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: To implement monetary policy in the 1920s, the Federal Reserve utilized administered interest rates and conducted open market operations in both government securities and private money market securities, sometimes in fairly considerable amounts. We show how the Fed was able to effectively use these tools to influence conditions in money markets, even those in which it was not an active participant. Moreover, our results suggest that the transmission of monetary policy to money markets occurred not just through changing the supply of reserves but importantly through financial market arbitrage and the rebalancing of investor portfolios. The tools used in the 1920s by the Federal Reserve resemble the extraordinary monetary policy tools used by central banks recently and provide further evidence on their effectiveness even in ordinary times.

Keywords: Monetary policy; Unconventional monetary policy; Central banking; administered rates; Money markets; Quantitative easing (search for similar items in EconPapers)
JEL-codes: E52 E58 N22 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2018-03-09
New Economics Papers: this item is included in nep-cba, nep-his, nep-mac and nep-mon
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://www.federalreserve.gov/econres/feds/files/2018019pap.pdf (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:fip:fedgfe:2018-19

DOI: 10.17016/FEDS.2018.019

Access Statistics for this paper

More papers in Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.) Contact information at EDIRC.
Bibliographic data for series maintained by Ryan Wolfslayer ; Keisha Fournillier ().