Monetary shocks and stock returns: Identification through the impossible trinity

Research, Preprint English OPEN
Ozdagli, Ali K. ; Yu, Yifan (2012)
  • Publisher: Boston, MA: Federal Reserve Bank of Boston
  • Subject: E52 | E44 | simultaneity | E58 | G12 | G15 | Monetary policy ; Monetary policy - Hong Kong ; Stock - Prices | stock prices | monetary policy | omitted variables | G18
    • ddc: ddc:330

This paper attempts to identify how monetary policy shocks affect stock prices by using Mundell and Fleming's theory of the "Impossible Trinity." According to this theory, it is impossible to simultaneously have a fixed exchange rate, free capital movement (an absence o... View more
  • References (1)

    Bernanke, Ben S., and Kenneth N. Kuttner. 2005. “What Explains the Stock Markets Reaction to Federal Reserve Policy?” Journal of Finance 60(3): 1221-1257.

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