Ronald S. Koot

A measure of Federal Reserve credibility

Abstract We create two credibility variables, one depending on the correspondence between the Fed forecast of inflation and the private sectors forecast, the other between the Fed forecast and actual inflation. These are measures of credibility in terms of whether the public believes that the Fed will carry out its announced policy and whether the policy will have the effect claimed by the Fed. We find that credibility was surprisingly high in the late 1970s. The Feds change in regime led to little change in credibility. The credibility variables help reduce the forecast errors of the Phillips curve in the early 1980s.

Rules versus Discretion: An Analysis of Income Stability and the Money Supply

Through countercyclical monetary policies, the Federal Reserve attempts to promote economic growth and stability. Milton Friedman [4, 5] has argued, however, for the elimination of deliberate countercyclical monetary policies in favor of increasing the stock of money at a regular, steady rate. Friedman asserts that any conscious stabilization policy may contribute to instability because the outside lag in monetary policy is so long and variable. Bronfenbrenner [2, 3] and Modigliani [10] have performed some statistical tests of alternative monetary rules. The tests are designed to discover how well the money supply has been managed with discretionary authority. The performance of the monetary authority is then compared with what might have happened if the money supply had been managed according to some automatic rules. When the rules increasing the money supply at the constant rates of 3 percent or 4 percent per year are compared to the performance of discretionary policy, Modiglianis evidence supports discretionary policy over rules, provided the discretion is used in the pursuit of price stability and full employment [10, pp. 243-44]. However, when the 3 or 4 percent rules are made to compete with discretionary policy in Bronfenbrenners test, the automatic rules are superior a 3 percent annual growth in the money supply being best [2, p. 13]. In a recent paper, the authors constructed and tested a model to determine whether the policies of the Federal Reserve have had a stabilizing or destabilizing effect on income during the post-accord period in the United States [9] . In the present paper, an attempt is made to evaluate the stabilizing

A statistical analysis of the impact of monetary policy on credit union lending

Abstract In this paper, a polynomial distributed lag regression model has been employed to determine the responsiveness of credit union consumer installment lending to changes in monetary policy. Estimation of the model leads to the following conclusions: (a) the model provides an adequate statistical representation of credit union reaction to monetary policy, (b) over time, credit union lending behavior has come to react more quickly to changes in monetary policy, and (c) over time, the degree, or strength, of response of lending behaviour to changes in monetary policy has weakend. The model is also applied to commercial bank consumer installment lending with similar results.

A job flow time regression model

The flow time of a job is the total time it spends in the computer system--from the time it is recognized to the time it is purged. The mean flow time is used to measure the service capability of a data processing shop because, the smaller the mean flow time, the more jobs that can be processed within a period of time. Since the progress of program development in a batch environment depends on the number of shots each programmer can have, a system management objective is to identify the factors which are essential to the flow time and ensure that the system is running optimally at all times.