Date of Award


Document Type


Degree Name

Master of Arts (MA)



First Advisor

Dr. Mark E. Wohar


The founding of the Federal Reserve System in the US in 1914 is viewed as a major structural transformation of the US economy. Scholars consider that the 1914 structural change of the US economy greatly altered the stochastic processes generating short term interest rates. In the US case, most short-term interest rate time series analyses suggest that prior to 1914 short-term interest rate time series were stationary whereas sometime after 1914 they became non-stationary. In addition to this finding, some researchers found that the same phenomenon occurred simultaneously in more European countries. This thesis challenges the theory of simultaneous world-wide occurrence of the altered behavior of short-term interest rates after 1914. It employs 2296 weekly observations of the British 60-day bankers’ drafts’ rate between 1890 and 1933. Using augumented Dickey-Fuller (ADF) regression techniques, the empirical results suggest that the founding of the Fed had no connection with the altered statistical behavior of British short-term interest rates.


A Thesis Presented to the Department of Economics and the Faculty of the Graduate College University of Nebraska In Partial Fulfillment of the Requirements for the Degree Master of the Arts in Economics University of Nebraska at Omaha. Copyright 1996, Catalin Vieru