NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve

N. Gregory Mankiw, Jeffrey A. Miron, David N. Weil

NBER Working Paper No. 2124 (Also Reprint No. r0915)
Issued in 1987
NBER Program(s):   ME   EFG

The founding of the Federal Reserve System in 1914 led to a substantial change in the behavior of nominal interest rates. We examine the timing of this change and the speed with which it was effected. We then use data on the term structure of interest rates to determine how expectations responded. Our results indicate that the change in policy regime was rapid and that individuals quickly understood the new environment they were facing.

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Document Object Identifier (DOI): 10.3386/w2124

Published: Mankiw, N. Gregory, Jeffrey A. Miron and David N. Weil. "The Adjustment of Expectations to a Change in Regime: A Study of the Founding of the Federal Reserve," American Economic Review, Vo. 77, No. 3, June 1987. citation courtesy of

 
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