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SUMMARY:The Economics of the Fed Put
DTSTART:20170512T103000
DTEND:20170512T120000
DTSTAMP:20260427T202650Z
UID:2c6b516466a4ea676c2b328f5e59f6f8a557bace6fdc9669276b1568
CATEGORIES:Conferences - Seminars
DESCRIPTION:Annette VISSING-JORGENSEN (Berkeley Haas)\nWe study the impact
  of the stock market on the Federal Reserve’s monetary policy. We analyz
 e the economics behind the “Fed put\,” i.e.\, the tendency for low sto
 ck returns to predict accommodating monetary policy. We show that stock re
 turns are a statistically more powerful predictor of Federal funds target 
 changes than standard macroeconomic news releases. Using textual analysis 
 of FOMC minutes and transcripts\, we then argue that stock returns cause F
 ed policy. FOMC participants are more likely to be concerned about the sto
 ck market after market declines and the frequency of negative stock market
  mentions in FOMC documents predicts target rate cuts. The focus on the st
 ock market reflects Fed’s concern about the consumption-wealth effect an
 d about the impact of the stock market on investment\, with less role for 
 the stock market simply predicting (as opposed to driving) the economy. We
  assess whether the Fed may be reacting too much to the stock market by (a
 ) comparing the sensitivity to the stock market of the Fed’s growth\, un
 employment and inflation forecasts with the stock-market sensitivity of pr
 ivate sector forecasts\, and (b) estimating whether the stock market impac
 ts target changes even after controlling for Fed expectations of economic 
 activity and inflation.
LOCATION:UNIL\, Extranef\, room 126 https://planete.unil.ch/plan/?local=EX
 T-126
STATUS:CONFIRMED
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