Trade Dynamics in the Market for Federal Funds

Ricardo Lagos and Gara Afonson
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Gara Afonson: Federal Reserve Bank of New York

No 314, 2011 Meeting Papers from Society for Economic Dynamics

Abstract: We develop a model of the market for federal funds that accounts for the two distinctive features of this market: banks have to search for a suitable counterparty, and once they have met, 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 several policy-relevant issues.

Date: 2011
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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 (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed011:314

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