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Thursday, October 22, 2020 | History

3 edition of What explains the stock market"s reaction to Federal Reserve policy? found in the catalog.

What explains the stock market"s reaction to Federal Reserve policy?

Ben S. Bernanke

What explains the stock market"s reaction to Federal Reserve policy?

by Ben S. Bernanke

  • 36 Want to read
  • 13 Currently reading

Published by National Bureau of Economic Research in Cambridge, Mass .
Written in English

    Subjects:
  • Stock exchanges -- United States,
  • Monetary policy -- United States

  • Edition Notes

    StatementBen S. Bernanke and Kenneth N. Kuttner.
    SeriesNBER working paper series -- no. 10402., Working paper series (National Bureau of Economic Research) -- working paper no. 10402.
    ContributionsKuttner, Kenneth N., National Bureau of Economic Research.
    The Physical Object
    Pagination55 p. :
    Number of Pages55
    ID Numbers
    Open LibraryOL17620346M
    OCLC/WorldCa55083662

      Indeed, Reserve Bank presidents sometimes use their public remarks, or dissents, with the intention of signaling future policy preferences or advocating for alternative frameworks. 28 Still, markets may discount the views of the presidents, on average, because they believe their views unnecessarily distort market signals or future policy.   This paper investigates how changes in Federal Reserve policy impact international stock returns, with the three objectives of measuring the reaction of international stock markets, understanding the transmission channels of that reaction, and explaining the economic sources of that reaction. We find that unanticipated Federal Reserve policy Cited by: 3.

    In its role as a bank regulator and supervisor, the Federal Reserve also often looks to market prices to help assess the safety and soundness of financial institutions. Today, I will discuss the role of financial markets in effective monetary, regulatory, and supervisory policy making by the Federal Reserve. NBER Program(s):Asset Pricing, International Finance and Macroeconomics, Monetary Economics. Movements in the stock market can have a significant impact on the macroeconomy and are therefore likely to be an important factor in the determination of monetary policy. However, little is known about the magnitude of the Federal Reserve's reaction to.

      White and Rasayam add that the Federal Reserve plays an important role in the impressive stock market activity they are observing. Investors seemed to react joyfully to the Fed’s announcement. The Federal Reserve Board of Governors in Washington DC. Consistent with its January Statement Regarding Monetary Policy Implementation and Balance Sheet Normalization, the Committee reaffirms its intention to implement monetary policy in a regime in which an ample supply of reserves ensures that control over the level of the federal funds rate and other short .


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What explains the stock market"s reaction to Federal Reserve policy? by Ben S. Bernanke Download PDF EPUB FB2

One approach to measuring the impact of Federal Reserve policy on the stock market is to calculate the market’s reaction to funds rate changes on the day of the change. The market may of course also react to the lack of a change in the funds rate target, if a change had Size: KB. One approach to measuring the impact of Federal Reserve policy on the stock.

market is to calculate the market’s reaction to funds rate changes on the day. of the change. The market may, of course, also react to the lack of a change in.

the funds rate target, if Cited by: This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives of both measuring the average reaction of the stock market and understanding the economic sources of that by: One approach to measuring the impact of Federal Reserve policy on the stock market is to calculate the market's reaction to funds rate changes on the day of the change.

The market may, of course, also react to the lack of a change in the funds rate target, if a change had been anticipated. Because this approach involves looking at the response to specific events, it might Cited by: NBER Working Paper No.

Issued in April NBER Program(s):Monetary Economics. This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives both of measuring the average reaction of the stock market and also of understanding the economic sources of that reaction.

Abstract. This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives both of measuring the average reaction of the stock market and also of understanding the economic sources of that reaction.

We find that, on average, a hypothetical unanticipated basis-point cut in the federal funds rate target is. Very little of the market’s reaction can be attributed to policy’s effects on the real rate of interest or future dividends, however.

Instead, most of the response of the current excess return on equities can be traced to policy’s impact on expected future excess returns.

JEL codes: E44, G This paper investigates how changes in Federal Reserve policy impact international stock returns, with the three objectives of measuring the reaction of international stock markets, understanding the transmission channels of that reaction, and explaining the economic sources of that reaction.

Stephen H. Axilrod explains this influential agency-its powers, operations, how it sets policy-in The Federal Reserve, a timely addition to Oxford's acclaimed series What Everyone Needs to Know. Of the two major governmental tools for shaping the economy, Congress controls fiscal policy-taxation and spending-and the Fed makes monetary policy Cited by: 1.

CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives both of measuring the average reaction of the stock market and also of understanding the economic sources of that reaction.

We find that, on average, a hypothetical unanticipated basis-point cut in the federal. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives of both measuring the average reaction of the stock market and understanding the economic sources of.

This paper analyzes the impact of unanticipated changes in the federal funds rate target on equity prices, with the aim of both estimating the size of the typical reaction and understanding the reasons for the market's response. We find that over the June December sample period, a typical unanticipated rate cut of 25 basis points is associated with an increase of.

This paper analyzes the impact of unanticipated changes in the federal funds rate target on equity prices, with the aim of both estimating the size of the typical reaction and understanding the reasons for the market's response. Does the Federal Reserve react to stock market movements in setting monetary policy.

And if the answer is yes, is the Fed's policy response of the appropriate magnitude. These are the questions that motivate Roberto Rigobon and Brian Sack in Measuring The Reaction of Monetary Policy to the Stock Market (NBER Working Paper No.

Bernanke, Ben and Kenneth N. Kuttner. “What Explains the Stock Market’s Reaction to Federal Reserve Policy?” Journal of Finance 60 (): What Explains the Stock Market's Reaction to Federal Reserve Policy. By BEN S objectives of both measuring the average reaction of the stock market and understanding the economic sources of that reaction.

We find that, on average, a hypothetical unanticipated basis-point cut in the Federal funds rate target is associated with about a 1% Author: BEN S.

BERNANKE and KENNETH N. KUTTNER. What explains the stock market’s reaction to Federal Reserve policy. This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives of both measuring the average reaction of the stock market and understanding the economic sources of that reaction.

We find that, on average, a hypothetical unanticipated Author: Ben S. Bernanke and Kenneth N. Kuttner. What explains the stock market's reaction to Federal Reserve policy.

both of measuring the average reaction of the stock market and also of understanding the economic sources of that reaction. We find that, on average, a hypothetical unanticipated basis-point cut in the federal funds rate target is associated with about a one percent Author: Ben S.

Bernanke and Kenneth N. Kuttner. CiteSeerX - Document Details (Isaac Councill, Lee Giles, Pradeep Teregowda): the associate editor of the Journal of Finance for their comments; and to Peter Bondarenko for research assistance. The views expressed here are solely those of the authors, and not necessarily those of the Federal Reserve System.

The views expressed herein are those of the author(s) and. Sections 3 Empirical results, 4 Robustness of the results present the significant and robust increase in the reaction of the stock markets to the policy actions of the Federal Reserve after the start of unconventional policy actions.

This result brings up the question about the reasons behind this substantial structural by: 3. Federal Reserve Bank of New York Staff Reports What Explains the Stock Market’s Reaction to Federal Reserve Policy? Ben S. Bernanke Kenneth N. Kuttner Staff Report no. October This paper presents preliminary findings and is being distributed to economists and other interested readers solely to stimulate discussion and elicit by: Abstract: This paper analyzes the impact of changes in monetary policy on equity prices, with the objectives both of measuring the average reaction of the stock market and also of understanding the economic sources of that find that, on average, a hypothetical unanticipated basis-point cut in the federal funds rate target is associated with about a one .The views expressed in the paper are those of the authors and are not necessarily reflective of views at the Federal Reserve Bank of New York or the Federal Reserve System.

Any errors or omissions are the responsibility of the authors. What Explains the Stock Market’s Reaction to Federal Reserve Policy?