U.S. Monetary Policy and Stock Prices: Should the Fed Attempt to Control Stock Prices?

Monetary Policy and Stock Prices in a DSGE Framework

Is the Federal Reserve at all concerned with stock market performance, as the observation of its recent conduct might seem to suggest? Is there a theoretical scope for such a concern? This paper addresses both questions, presenting and estimating a small structural model that provides a theoretical rationale for looking at equity prices in conducting Monetary Policy. The focus is on the effects...

Stock prices and house prices: Which one affects the other?

Stocks and houses as two major assets which play important role in the balance sheet of Iranian households. Changes in two markets have a large influence on wealth and the general economy. The purpose of this study is to examine the relationship between stock and house prices over a thirty-year period using vector auto-regression (VAR). Using yearly data for the period from 1985 to 2013, we con...

The Weekly Structure of Us Stock Prices

In this paper we use fractional integration techniques to examine the degree of integration of four US stock market indices, namely the Standard and Poor, Dow Jones, Nasdaq and NYSE, at a daily frequency from January 2005 till December 2009. We analyse the weekly structure of the series and investigate their characteristics depending on the specific day of the week. The results indicate that th...

US Stock Prices and Macroeconomic Fundamentals

Has the Fed Reacted Asymmetrically to Stock Prices?

Yes. To the extent that monetary policy is assumed to react to asset prices, this reaction is usually assumed to be linear. This paper o¤ers a new perspective. I augment the model of Rigobon and Sack (2003) to allow for asymmetric reactions to stock price changes. I then demonstrate that the Federal Reserve has been following an asymmetric monetary policy rule over the period 19982008. While a ...