Title

Interest Rate Uncertainty and the Founding of the Federal Reserve

Document Type

Article

Publication Date

12-1998

Publication Source

Journal of Economic History

Abstract

This article examines the impact of what is undoubtedly the most important monetary regime change in U.S. history: the founding of the Federal Reserve System. We find, using a (G)ARCH model, a significant reduction in interest rate uncertainty following the founding of the Fed. Additionally, we show that the passage of the Aldrich-Vreeland Act in 1908, another significant change in policy, also led to a reduction in interest rate uncertainty. These results are robust to alternative interest rate models, as well as to incorporating the impact of other events important to financial markets in our sample.

Inclusive pages

1110-1117

ISBN/ISSN

0022-0507

Publisher

Cambridge University Press

Volume

58

Issue

4

Peer Reviewed

yes