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THE RELATION BETWEEN NARRATIVE AND MONEY MARKET INDICATORS OF MONETARY POLICY
Author(s) -
BOSCHEN JOHN F.,
MILLS LEONARD O.
Publication year - 1995
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.1995.tb01844.x
Subject(s) - monetary policy , narrative , treasury , economics , monetary economics , interest rate , monetary base , macroeconomics , political science , literature , law , art
This paper studies the relation between narrative‐based indicators of monetary policy and widely used money market indicators of monetary policy. Three principal findings emerge. First, changes in monetary policy, as measured by the narrative‐based policy indices, are associated with persistent changes in the levels of M2 and the monetary base. In contrast, changes in the narrative policy indicators lead to transitory changes in short‐term interest rates, nonborrowed reserves, and the spread between the six‐month commercial paper rate and the three‐month treasury bill rate. Third, these findings are generally robust across different narrative‐based policy indices.