Abstract
The purpose of this paper is to examine the nature of the response by the Federal Reserve to changes in economic conditions. Unlike previous studies, however, the specification of the reaction function for the Federal Reserve employed here will take account of the fact that the marginal response may vary with the severity of economic conditions. Whether or not this is the case is determined by developing a generalized spline estimator. It is found that the Federal Reserve's reaction to economic conditions does indeed vary with the severity of these conditions. The implications of this finding are discussed.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
