Jared Fike

Document Type

Honors Project

First Advisor

Dr. David Huffman

Degree Award Date

Spring 2005

Keywords

FOMC Policy 1973-2004, Federal Open Market Committee, federal funds rate, historical data, Taylor Rule

Disciplines

Economic History | Economics

Abstract

This study begins with a look at some past research on the Taylor Rule, Fed independence, and some other researchers that have attempted to describe Fed action. We will then move to a section describing my equation and the theoretical framework within which it operates. This will include a discussion of the variables and why I chose the ones that I did. We will then move on to the results of my equation and measure the effectiveness of the equation. A policy discussion follows. Through these sections I will be developing a model based off of several variables, which will be developed and discussed later. I believe that this equation, using GDP growth, Ml velocity, quarterly inflation, total housing sales, and oil pricing as variables can, within a reasonable margin of error, predict and explain the action of the FOMC in setting the federal funds rate.

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