No abstract

In recent years, financial markets appear better able to anticipate FOMC policy changes. Beginning in the late 1980s and early 1990s, longer-term interest rates and futures rates have tended to incorporate movements in the federal funds rate several months in advance, in contrast to the largely contemporaneous response typically observed before that time. After identifying these emerging trends, the paper parses the enhanced predictability into a component that can be attributed to the autoregressive behavior of the funds rate and a non-autoregressive component. The paper considers institutional developments in FOMC policy making that may have contributed to each of these components, including gradualism in adjusting the federal funds rate target and transparency regarding the setting of the target and future policy intentions.

No abstract

This study investigates credit card holding and the household demands for several ftonetary assets in a simultaneous equations fraftework. It exploits the detailed data on household assetsr as well as demographic and preference characteristics in the 1983 Survey of Consumer finances. A key findingr is t,hat, consistent with theory' a higher probability of credit card ownership implies lower demand for liquid money balances with no effect on snall time deposit balancea. JEL Classification Codes: EAI, E50, Dfz Account ownership is then equivalent to the fo]lowing events: A=1r M* lM-, and u3zT.