Interest Rate Uncertainty and the Founding of the Federal ReserveJournal of Economic History
AbstractThis article examines the impact of what is undoubtedly the most important monetary regime change in U.S. history: the founding of the Federal Reserve System. We find, using a (G)ARCH model, a significant reduction in interest rate uncertainty following the founding of the Fed. Additionally, we show that the passage of the Aldrich-Vreeland Act in 1908, another significant change in policy, also led to a reduction in interest rate uncertainty. These results are robust to alternative interest rate models, as well as to incorporating the impact of other events important to financial markets in our sample.
PublisherCambridge University Press
Citation InformationTony Caporale and Barbara McKiernan. "Interest Rate Uncertainty and the Founding of the Federal Reserve" Journal of Economic History Vol. 58 Iss. 4 (1998)
Available at: http://works.bepress.com/tony_caporale/15/