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This feature is particularly useful in the present application as many economic fundamentals that are monitored by the Fed and are believed to affect decisions to adjust interest rate targets display some nonstationarity over time. The chosen model successfully predicts the majority of the target rate changes during the time period considered (1994\u20132001) and helps to explain strings of similar intervention decisions by the Fed. Based on the model\u2010implied optimal interest rate, our findings suggest that there is a lag in the Fed's reaction to economic shocks during this period. Copyright \u00a9 2004 John Wiley &amp; Sons, Ltd.<\/jats:p>","DOI":"10.1002\/jae.747","type":"journal-article","created":{"date-parts":[[2004,5,17]],"date-time":"2004-05-17T12:00:56Z","timestamp":1084795256000},"page":"851-867","source":"Crossref","is-referenced-by-count":68,"title":["Dynamics of the federal funds target rate: a nonstationary discrete choice approach"],"prefix":"10.1002","volume":"19","author":[{"given":"Ling","family":"Hu","sequence":"first","affiliation":[],"role":[{"vocabulary":"crossref","role":"author"}]},{"given":"Peter C. 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