Central Banks' Policies Directly Sway Financial Markets, Impacting Everyday Lives
The article explores how monetary policy affects financial markets by developing a non-linear model to better understand the relationship between central bank policy and asset prices. The researchers address the limitations of current models and propose a new approach to analyze the transmission of policy to financial markets. The findings suggest that by incorporating non-linear dynamics, a more accurate understanding of the impact of policy on asset markets can be achieved, which can help inform future policy design decisions.