Did the FED respond to liquidity shortage episodes during the Great Depression ?

Abstract : The October 1929 crash led to a complete freeze of New York open markets. Studying the Fed monetary policy conduct in a nonlinear framework, using credit spreads between open market rates and the Fed's instrument rates as a proxy for liquidity risk, we present econometric evidence that the Fed was well aware of such risks as early as 1930, reacted to the financial stress and altered its monetary policy in consequence. Our outcomes revisit conventional wisdom about the presumed passivity of the Fed throughout the 30s.
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https://hal.univ-lorraine.fr/hal-01762624
Contributor : Séverine Baldasso <>
Submitted on : Tuesday, April 10, 2018 - 11:53:59 AM
Last modification on : Thursday, May 16, 2019 - 1:45:42 AM

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Olivier Damette, Antoine Parent. Did the FED respond to liquidity shortage episodes during the Great Depression ?. Macroeconomic Dynamics, Cambridge University Press (CUP), 2018, ⟨10.1017/S1365100516001073⟩. ⟨hal-01762624⟩

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