The unusual behavior of the federal funds and 10-year treasury rates
Subtitle: a conundrum or Goodhart's law?
By: by Daniel L. Thornton
Contributors: Federal Reserve Bank of St. Louis
Series: Working paper -- 2007-039A; Working paper (Federal Reserve Bank of St. Louis : Online) -- 2007-039A.
Publisher: Federal Reserve Bank of St. Louis
Published: 2007
Place of publication: St. Louis, Mo.]
Language: eng
Format: [electronic resource] :
Description: "In February 2005, former Chairman Alan Greenspan referred to the decline in long-term rates in the wake of the Fed increasing the target for the federal funds rate by 150 basis points as a "conundrum." Greenspan's remarks generated considerable interest and research.  I show that the relationship between the 10 year Treasury yield and the federal funds rate changed dramatically in the late 1980s, well in advance of Greenspan's observation.  I argue that the marked change in the relationship between the federal funds rate and long-term yields is a natural consequence of Goodhart's Law"--Federal Reserve Bank of St. Louis web site.
Notes: Title from PDF file as viewed on 9/17/2007.

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