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Monetary Policy and the Stock Market: Study of Japan and the United States - Dissertation Example

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Monetary Policy and the Stock Market Study of Japan and the United States Abstract This study is anchored on the effectiveness of the Taylor Rule in determining the interest rates that controls the amount of money in circulation. The amount of money in circulation defines the inflationary rate of an economy…

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Monetary Policy and the Stock Market: Study of Japan and the United States

Its goods are sold internally as well as externally competing against products that are sourced from other countries. Japan’s economy is heavily dependent on the activities generated by its export and import industry. In fact, Japan’s basic needs are supplied by its imports while the country’s economic wealth is supported by the export of Japan’s industries. This thesis will show that the Taylor rule can also be used effectively in any kind of economic activity to ensure that proper modeling can be achieved to sustain a monetary policy if not form them according to the result of the model. Contents Study of Japan and the United States 1 Abstract 2 Contents 3 Introduction 4 Literature Review 6 Empirical Framework 10 United States 11 Japan 17 Data Description 25 Japan 26 United States 26 Empirical Results 26 Conclusion 29 References 33 Introduction Research on monetary policy and their effect on stock market are important as it will explain the purpose of monetary policy in promoting price stability and moderate interest rates. Determining the impact of monetary policy to stock market will enable market analyst to predict stock movements. Trending and predicting movements of economic indicators will enable market analyst to determine foreign exchange trends. ...
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