Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072)

Research output: Working paperDiscussion paperOther research output

233 Downloads (Pure)

Abstract

Abstract: Central banks in fluence financial markets' expectations of its future policy. By providing its stance on the prospects of the economy, rationalizing past decisions or announcing future actions, central banks affect financial markets' forecasts. In bad times monetary policy communication inducing an upward revision of the path of future policy is good news for stocks. During an expansion the effect is weak and on average negative. The response of equities to central bank talk depends critically on the business cycle. There are strong industry specific effects of monetary policy actions and communication. These industry effects relate to the variation in cyclicality of different industries. Firmspecific effects of monetary policy relate to the leverage, the size and the price-earnings ratio of firms.
Original languageEnglish
Place of PublicationTilburg
PublisherEconomics
Number of pages55
Volume2012-012
Publication statusPublished - 2012

Publication series

NameCentER Discussion Paper
Volume2012-012

Fingerprint

Central bank
Stock market
Monetary policy
Industry
Communication
Financial markets
Price earnings ratio
Equity
Cyclicality
News
Business cycles
Industry effects
Leverage

Keywords

  • Monetary policy
  • Federal Reserve Communication
  • Credit channel
  • Business cycle
  • Stock market

Cite this

Eijffinger, S. C. W., Mahieu, R. J., & Raes, L. B. D. (2012). Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072). (CentER Discussion Paper; Vol. 2012-012). Tilburg: Economics.
@techreport{347a970d4a05416fa3511a8ac7b011d0,
title = "Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072)",
abstract = "Abstract: Central banks in fluence financial markets' expectations of its future policy. By providing its stance on the prospects of the economy, rationalizing past decisions or announcing future actions, central banks affect financial markets' forecasts. In bad times monetary policy communication inducing an upward revision of the path of future policy is good news for stocks. During an expansion the effect is weak and on average negative. The response of equities to central bank talk depends critically on the business cycle. There are strong industry specific effects of monetary policy actions and communication. These industry effects relate to the variation in cyclicality of different industries. Firmspecific effects of monetary policy relate to the leverage, the size and the price-earnings ratio of firms.",
keywords = "Monetary policy, Federal Reserve Communication, Credit channel, Business cycle, Stock market",
author = "S.C.W. Eijffinger and R.J. Mahieu and L.B.D. Raes",
note = "This is also EBC Discussion Paper 2012-006 Pagination: 55",
year = "2012",
language = "English",
volume = "2012-012",
series = "CentER Discussion Paper",
publisher = "Economics",
type = "WorkingPaper",
institution = "Economics",

}

Eijffinger, SCW, Mahieu, RJ & Raes, LBD 2012 'Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072)' CentER Discussion Paper, vol. 2012-012, Economics, Tilburg.

Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072). / Eijffinger, S.C.W.; Mahieu, R.J.; Raes, L.B.D.

Tilburg : Economics, 2012. (CentER Discussion Paper; Vol. 2012-012).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072)

AU - Eijffinger, S.C.W.

AU - Mahieu, R.J.

AU - Raes, L.B.D.

N1 - This is also EBC Discussion Paper 2012-006 Pagination: 55

PY - 2012

Y1 - 2012

N2 - Abstract: Central banks in fluence financial markets' expectations of its future policy. By providing its stance on the prospects of the economy, rationalizing past decisions or announcing future actions, central banks affect financial markets' forecasts. In bad times monetary policy communication inducing an upward revision of the path of future policy is good news for stocks. During an expansion the effect is weak and on average negative. The response of equities to central bank talk depends critically on the business cycle. There are strong industry specific effects of monetary policy actions and communication. These industry effects relate to the variation in cyclicality of different industries. Firmspecific effects of monetary policy relate to the leverage, the size and the price-earnings ratio of firms.

AB - Abstract: Central banks in fluence financial markets' expectations of its future policy. By providing its stance on the prospects of the economy, rationalizing past decisions or announcing future actions, central banks affect financial markets' forecasts. In bad times monetary policy communication inducing an upward revision of the path of future policy is good news for stocks. During an expansion the effect is weak and on average negative. The response of equities to central bank talk depends critically on the business cycle. There are strong industry specific effects of monetary policy actions and communication. These industry effects relate to the variation in cyclicality of different industries. Firmspecific effects of monetary policy relate to the leverage, the size and the price-earnings ratio of firms.

KW - Monetary policy

KW - Federal Reserve Communication

KW - Credit channel

KW - Business cycle

KW - Stock market

M3 - Discussion paper

VL - 2012-012

T3 - CentER Discussion Paper

BT - Can the Fed talk the Hind Legs off the Stock Market? (replaces CentER DP 2011-072)

PB - Economics

CY - Tilburg

ER -