Research

Working Papers

September 1984, No. 84-4

A Weekly Perfect Foresight Model of the Nonborrowed Reserve Operating Procedure

Marvin Goodfriend
Gary Anderson
Anil Kashyap
George Moore
Richard D. Porter

Our Research Focus: Financial Markets & Institutions

Of the many studies analyzing the Federal Reserve's post-October 6, 1979 nonborrowed reserve (NBR) operating procedure, none has focused upon weekly money market dynamics under rational expectations.  This paper employs the rational expectations assumption in an explicit institutional model of the NBR procedure.  The paper is positive rather than normative, isolating the policy elements that comprise the procedure and investigating their dynamic interaction.

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