MONETARY POLICY TRANSMISSION AND FARMLAND DYNAMICS: EVIDENCE FROM FEDERAL FARM CREDIT BANKS FUNDING CORPORATION BONDS
This study evaluates the potential of Federal Farm Credit Banks Funding Corporation (FCFC) bond yields as a lens to understand the transmission of U.S. monetary policy. FCFC bonds, as government-sponsored enterprise securities, uniquely combine an implicit government guarantee with exposure to the U.S. agricultural sector. The research investigates whether changes in the Federal Funds Rate are effectively transmitted through FCFC bond yields, and how these yields reflect both policy shifts and sector-specific dynamics. By comparing FCFC bond yields to U.S. Treasury yields across maturities and incorporating agricultural market indicators, the study develops an integrated empirical framework to disentangle policy-driven effects from sector-specific risks in bond pricing. The findings highlight the role of FCFC bonds as responsive financial instruments that connect policy signals with the real economic outcomes, particularly within agriculture. This provides a novel perspective on how sector-targeted bonds can enhance our understanding of monetary policy effectiveness.