The recent behavior of adjustment credit at the discount window

This paper examines the behavior of adjustment credit at the Federal Reserv e discount window over the period 1990 to 1997. It finds that in spite of t he decline in the traditional borrowing function, the relationship still co ntains information that is important for the execution of monetary policy. In particular, the paper shows the usefulness of distinguishing between the spread between the targeted Federal funds rate and the discount rate and t he spread between the actual Federal funds rate and the targeted rate. The paper also demonstrates the potential importance of using high frequency da ta.