Thia paper analyzes U.S. monetary-financial policy in the period leading
up to the Treasury-Fed Accord. We model policy as an implicit target zone for
the price level and an explicit zone for interest rates, and the difficulties
on the eve of the Accord as an incipient run on a collapsing target-zone
regime. The regime was implemented to maintain the stability of the financial
system in a period when there was a serious maturity mismatch between the
assets and liabilities of the banking system.
*Published: This paper was subsequently published as Before the Accord: U.S. Monetary-Financial Policy, 1945-51, Barry Eichengreen, Peter M. Garber, in NBER book Financial Markets and Financial Crises (1991)
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