Federal Reserve Behavior Since 1980: A Financial Markets Perspective

William C. Melton and V. Vance Roley

No 2608, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The financial market's understanding of Federal Reserve behavior is used to examine recent changes in monetary policy. Changes in the level of interest rats in response to specific types of economic information are primarily considered. Differences in the volatility of interest rates across period provide additional evidence on changes in monetary policy regimes. The results indicate that monetary policy changed several times since 1980 with respect to either the Federal Reserve's targets, its desire to achieve its targets, or its operating procedures. The different regimes correspond to Federal Reserve statements about changes in policy. In this context, then, the evidence suggests that policy was credible.

Date: 1988-06
Note: ME
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Published as Mayer, Thomas (ed.) The Political Economy of American Monetary Policy. New York: Cambridge University Press, 1990.

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