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The Reaction of Interest Rates to Unanticipated Federal Reserve Actions and Statements, 1977-1984 : Implications for the Money Announcement Controversy, Working Paper 86-2

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The Reaction of Interest Rates to Unanticipated Federal Reserve Actions and Statements, 1977-1984 : Implications for the Money Announcement Controversy, Working Paper 86-2

DATE: June 1986

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ABSTRACT: Considerable attention has been devoted to the reaction of interest rates, foreign exchange rates, and stock prices to unanticipated money growth revealed by the weekly M1 money stock announcement. Numerous articles have attempted to explain why nominal interest rates rise following the announcement of an M1 figure higher than expected and fall when an M1 figure is lower than expected. The major controversy in this literature is whether the observed reaction of interest rates reflects changes in the inflation expectations component or in the real rate component of the nominal rate.

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Cook, Timothy Q. and Hahn, Thomas. "The Reaction of Interest Rates to Unanticipated Federal Reserve Actions and Statements, 1977-1984 : Implications for the Money Announcement Controversy, Working Paper 86-2," Working Papers (Federal Reserve Bank of Richmond) (June 1986). https://fraser.stlouisfed.org/title/3942/item/477009, accessed on April 19, 2024.

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PUBLISHER: Federal Reserve Bank of Richmond

PLACE: Richmond

DIGITAL COPY SOURCE: Federal Reserve Bank of Richmond

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