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Working Papers

July 1988, No. 88-4

The Effect of Changes in the Federal Funds Rate Target on Market Interest Rates in the 1970s

Timothy Q. Cook and Thomas K. Hahn

The standard empirical test of whether the Federal Reserve can influence interest rates is to regress interest rates on current and past (actual or unexpected) values of money growth.  This literature generally finds little support for the view that the Fed can influence interest rates, except perhaps through the positive impact on inflation expectations of increases in money growth. 

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