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The Changing Probability of a Monetary Policy Response to Inflation and Employment Announcements

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  • Adrienne A. Kearney

    (: Department of Economics, University of Maine)

Abstract

This paper investigates the changing probability of a monetary policy response to inflation and employment announcements within the Federal Funds targeting procedure. It is found that employment announcements are significantly linked to Federal Reserve policy actions and the probability of no change in the funds target more than doubles in going from the March 1984-March 1991 period to the April 1994-January 2002 period. This change in policy behavior is also mirrored by the behavior of financial market participants; employment surprises help explain movements in the T-bill rate in the earlier period but not in the later period.

Suggested Citation

  • Adrienne A. Kearney, 2003. "The Changing Probability of a Monetary Policy Response to Inflation and Employment Announcements," Eastern Economic Journal, Eastern Economic Association, vol. 29(4), pages 565-574, Fall.
    • Handle: RePEc:eej:eeconj:v:29:y:2003:i:4:p:565-574
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    File URL: http://web.holycross.edu/RePEc/eej/Archive/Volume29/V29N4P565_574.pdf
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    References listed on IDEAS

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    Cited by:

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    More about this item

    Keywords

    Employment; Fund; Inflation; Monetary Policy; Monetary; Policy;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects

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