Trade Dynamics in the Market for Federal Funds

We are grateful to Todd Keister for his feedback at various stages. We also thank Darrell Duffie, Huberto Ennis and Tan Wang for comments. Lagos thanks the support from the C.V. Starr Center for Applied Economics at NYU, and the hospitality of the Cowles Foundation for Research in Economics at Yale University. While working on this project, Lagos was a short-term visiting scholar at the Federal Reserve Banks of Minneapolis, Philadelphia, New York, and St. Louis. The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of Minneapolis, New York, Philadelphia, St. Louis, the Federal Reserve System, or the National Bureau of Economic Research.