| Finance and Economics Discussion Series: What Explains the Stock Market's Reaction to Federal Reserve Policy Contributor(s): Bernanke, Ben S. (Author), Kuttner, Kenneth N. (Author), United States Federal Reserve Board (Created by) |
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ISBN: 1288713215 ISBN-13: 9781288713219 Publisher: Bibliogov OUR PRICE: $16.86 Product Type: Paperback - Other Formats Published: February 2013 |
| Additional Information |
| BISAC Categories: - Political Science |
| Physical Information: 0.12" H x 7.44" W x 9.69" (0.28 lbs) 60 pages |
| Descriptions, Reviews, Etc. |
| Publisher Description: 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 25-basis-point cut in the federal funds rate target is associated with about a one percent increase in broad stock indexes. Adapting a methodology due to Campbell (1991) and Campbell and Ammer (1993), we find that the effects of unanticipated monetary policy actions on expected excess returns account for the largest part of the response of stock prices. |