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The Information Content of Discount Rate Announcements Revisited.

Authors :
Wagster, John
Source :
Journal of Money, Credit & Banking (Ohio State University Press); Feb93, Vol. 25 Issue 1, p132-137, 6p, 2 Charts
Publication Year :
1993

Abstract

This article presents comments by the author on the paper "The information Content of Discount Rate Announcements and Their Effect on Market Interest Rates," by Timothy Cook and Thomas Hahn that was published in the May 1988 issue of the periodical "Journal of Money, Credit, and Banking." Cook and Hahn argued that the Federal Reserve used discount rate change announcements to signal movements in the federal funds rate throughout the 1973-79 period. They contend that announced changes in the discount rate provided predictive information to market participants. Investors understood these signals and changed their behavior accordingly, which affected Treasury bill rates. However, scholars V. Vance Roley and Rick Troll, and Michael Smirlock and Jess Yawitz have argued that Federal Reserve's discount rate policy did not reveal any additional information and thus did not have an effect on market interest rates.

Details

Language :
English
ISSN :
00222879
Volume :
25
Issue :
1
Database :
Complementary Index
Journal :
Journal of Money, Credit & Banking (Ohio State University Press)
Publication Type :
Academic Journal
Accession number :
5191802
Full Text :
https://doi.org/10.2307/2077825