Economic Effects of Government Policy

Paper Summary:

This paper examines the economic effect of three specific areas of government policy. It looks at the policies of the Board of Governors of the Federal Reserve System, the policies incorporated into the Americans With Disabilities Act (ADA) and environmental protection policies. Some of the issues discussed include the effect of the Federal Reserve on the level of interest rates, the effect of ADA on the welfare of both insurance companies and people afflicted with AIDS and the health costs for persons residing in regions with severe air pollution.

From the Paper:

"The use of the reserve bank discount window is a secondary activity to the Federal Reserve System's open market operations. The reserve bank discount window provides a source of temporary (overnight in most instances) funds to member banks (Board of Governors, Federal Reserve System, 1996). Of far greater significance is the discount rate the interest rate the Federal Reserve System charges to member banks when they borrow from the Federal Reserve banks. The influence of the discount rate is felt far beyond the realm of member bank borrowings from the Federal Reserve System, as changes in this rate tends to be reflected in changes in other interest rates throughout the economy (Marshall, 1998)."

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