Archive for December 18th, 2025

A simple measure of monetary policy transmission

December 18, 2025
Sam Schulhofer-Wohl of Dallas Fed proposes a new measure of monetary transmission. He suggests that Fed should target Tri-Party General Collateral Rate (TGCR) insteaf of Fed Funds Rate:
I develop a new measure of how the Federal Open Market Committee’s (FOMC’s) monetary policy stance transmits through money markets. The measure is based on forecast errors resulting from using the Effective Federal Funds Rate to predict a variety of money market rates. The measure shows that monetary policy transmission has deteriorated in recent months but does not exhibit a breakdown comparable to those in 2018 through 2020. The Tri-Party General Collateral Rate (TGCR) transmits more robustly, consistent with a recent proposal for the FOMC to adopt TGCR as its operating target instead of fed funds.

Posted in Academic research & research papers, Central Banks / Monetary Policy, Economics - macro, micro etc, Financial Markets/ Finance | Leave a Comment »

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