Economics, Econometrics and Finance
4 years ago

Contractionary Monetary Policy Shocks Lead to Stock Market Downturn in Europe

SSRN Electronic Journal
The Relation between Monetary Policy and the Stock Market in Europe
Helmut Lütkepohl, Aleksei Netšunajev

Paper Summary

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The study looked at how European monetary policy affects the stock market. By using a special model, they found that when the central bank tightens money supply, stock prices tend to drop for a long time.