Implementation of Monetary Policy: How Do Central Banks Set Interest Rates?
Benjamin Friedman; Kenneth Kuttner;
- Subject: Reserve supply, reserve demand, liquidity effect, announcement effect
- jel: jel:E43 | jel:E52 | jel:E58
Central banks no longer set the short-term interest rates that they use for monetary policy purposes by manipulating the supply of banking system reserves, as in conventional economics textbooks; today this process involves little or no variation in the supply of centra... View more