Relationship between monetary policy and stock market finance essay
This article studies the relationship between monetary policy and stock market returns in the US using non-linear econometric models. It first uses a univariate Markov switching model on each of the three stock indices and three monetary policy variables, showing significant regime switching patterns and common movements. Monetary policy and stock market interactions: international evidence. The Indian Economic Journal: The quarterly journal of the Indian Economic, 1. This means that during the financial crisis, the monetary policy variables are not. The analysis shows that there is a negative relationship between stock market returns and interest rates. Thorbecke, 1997 studied stock market returns and monetary policy in the US, and found a strong positive relationship between expansionary monetary policy and stock market returns. Analysis of data revealed that only a combination of monetary and fiscal policies exerted a significant influence on the development of the Nigerian stock market, monetary policy. First, stock prices and, more generally, relative asset prices appear to play an important role in the transmission mechanism in the euro area. In fact, real output responds to the slope of the yield curve and to deviations of stock prices from equilibrium. Second, we do not find any significant direct effect of stock prices on inflation. Design Methodology This article emphasized the relationship between monetary policy and market interest rates in terms of achieving the objectives of macroeconomic regulation. In this study, we investigate the financial and monetary policy responses to oil price shocks using a structural VAR framework. We distinguish between net oil imports and net oil exports. The bounds test approach was therefore necessary to find the relationship between interest rates and the monetary policy rate, and thus the response of interest rates to changes in the policy rate. The value of the calculated F-statistic can be derived from this. is greater than the lower and upper limits. The primary objective of monetary policy in Nigeria has been to maintain domestic prices. exchange rate stability as it is crucial for achieving sustainable economic growth. Our study therefore contributes to the literature on monetary policy and asset price shocks from a regional perspective, joining studies such as: Tng and Kwek 2015, which examine the relationship between financial stress and monetary policy Yang and Hamori 2014, which evaluate how ASEAN stock markets respond to US monetary policy. The impact of a surprising monetary policy in a bear market is measured by β 1, while the impact of a surprising monetary policy in a bull market is measured by β 1, β 2. The right panel shows that The impact of a surprising monetary policy in a bear market is large, negative, and statistically significant for both the CRSP value-weighted and the,