Does the Fed Control Interest Rates?

Fama, Eugene F.

doi:10.2139/ssrn.2124039

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Does the Fed Control Interest Rates?

The Review of Asset Pricing Studies, Forthcoming

Chicago Booth Research Paper No. 12-23

Fama-Miller Working Paper

6 Pages Posted: 5 Aug 2012 Last revised: 27 Oct 2022

See all articles by Eugene F. Fama

Eugene F. Fama

University of Chicago - Finance

Date Written: October 25, 2022

Abstract

My paper, “Does the Fed control interest rates?” is in the 2013 Review of Asset Pricing Studies (Volume 3, pp. 180-199). The paper finds that the Fed controls the Federal Funds (FF) rate (the overnight rate on interbank borrowing of reserves). Other short-term rates are related to FF, but they take long swings away from FF, and the relations between FF and other rates weaken quickly for longer maturities.

JEL Classification: E20, E42, E43, E44, E52, E58, G12, G18

Suggested Citation: Suggested Citation

Fama, Eugene F., Does the Fed Control Interest Rates? (October 25, 2022). The Review of Asset Pricing Studies, Forthcoming, Chicago Booth Research Paper No. 12-23, Fama-Miller Working Paper, Available at SSRN: https://ssrn.com/abstract=2124039 or http://dx.doi.org/10.2139/ssrn.2124039