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Inflation, Monetary Policy and Stock Market Conditions / Michael D. Bordo, Michael J. Dueker, David C. Wheelock.
- Format:
- Book
- Author/Creator:
- Bordo, Michael D.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w14019.
- NBER working paper series no. w14019
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2008.
- Summary:
- This paper examines the association between inflation, monetary policy and U.S. stock market conditions during the second half of the 20th century. We estimate a latent variable VAR to examine how macroeconomic and policy shocks affect the condition of the stock market. Further, we examine the contribution of various shocks to market conditions during particular episodes and find evidence that inflation and interest rate shocks had particularly strong impacts on market conditions in the postwar era. Disinflation shocks promoted market booms and inflation shocks contributed to busts. We conclude that central banks can contribute to financial market stability by minimizing unanticipated changes in inflation.
- Notes:
- Print version record
- May 2008.
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