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THE REGIONAL IMPACT OF MONETARY POLICY IN THE UNITED STATES
Abstract
The purpose of this study is to investigate the degree of monetary policy pervasiveness in the United States. The hypothesis we set out to test is that: A given open market operation on the part of the Federal Reserve System will have its greatest impact on the net source base of the New York Federal Reserve district, followed by the Atlanta and Kansas City districts respectively. The pattern of net source base distribution seems to be determined by the economic base, total assets of commercial banks, as well as consumption and investment preferences of individuals, government and firms in a region. The change in regional net source base is specified as consisting of the portion due to interregional commercial and financial transactions and of the region's share of changes in the national components of the net source base. Regional and interregional money and credit multipliers are derived from the regional net source base equations. The stability of the changes in regional net source base models and the multipliers are examined. Within the four region framework of our analysis, the Kansas City Federal Reserve district had the most unstable net-source base equation and money multipliers during the study period which covered 1969-1 to 1978-2. The regional money stock and bank credit were estimated from the net source base and money and credit multipliers. The error in predicting money stock was largest in the Kansas City district as a result of the instability in the district's money supply function. The greater instability in the Kansas City district money supply function resulted in greater fluctuation in change in the district's money stock growth rates. Monetary policy is not uniformly pervasive throughout the regions of the United States, and the effect of any monetary policy will depend heavily on the definition of the separate economic regions.
Subject Area
Banking
Recommended Citation
EZIKPE, JONA NDUKWE, "THE REGIONAL IMPACT OF MONETARY POLICY IN THE UNITED STATES" (1981). ETD collection for University of Nebraska-Lincoln. AAI8120160.
https://digitalcommons.unl.edu/dissertations/AAI8120160