AN ANALYSIS OF USING FOMC PURCHASES TO REDUCE KNIGHTIAN RISK

Although the literature suggests the Government can play a key role in reducing Knightian risk by means of market intervention, there are surprisingly few documented examples where such a policy was explicitly attempted. However, the recently completed effort by the Treasury, in partnership with the...

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Bibliographic Details
Published inAllied Academies International Conference. Academy of Accounting and Financial Studies. Proceedings Vol. 18; no. 1; p. 27
Main Author Gross, Thomas F
Format Journal Article
LanguageEnglish
Published Arden Jordan Whitney Enterprises, Inc 01.01.2013
Subjects
Asset acquisitions
Central banks
Government agencies
Hypotheses
International finance
Intervention
Mortgage backed securities
Mortgage companies
Prices
Purchasing
Statistical analysis
Studies
TARP funds
Treasuries
Uncertainty
United States > US
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Summary:Although the literature suggests the Government can play a key role in reducing Knightian risk by means of market intervention, there are surprisingly few documented examples where such a policy was explicitly attempted. However, the recently completed effort by the Treasury, in partnership with the Fed, to stabilize the market for Mortgage-backed securities is an example of such an attempt. A statistical analysis of purchase and sale prices of Agency mortgage-backed securities indicates that the effort was successful. [PUBLICATION ABSTRACT]