Monetary Policy and the Stock Market - Dissertation Example

Only on StudentShare

Extract of sample
Monetary Policy and the Stock Market

And for bankers and financial managers who wants to exercise prudence and responsible banking it would be wise to work with monetary authorities to ensure that the monetary policy is supported unequivocally. Money or currency is the government of the country’s commitment to its holder that the money can be traded in exchange for goods in the country. Meanwhile the true value of money is dependent on several factors such as the actual value of the goods that can be bought by the money or its value as compared with other currencies. However, given that these factors are also dependent on other economic indicators such as inflation and the volume of foreign currency reserve a country has, the correlation of the monetary policy of a country with its interest rates, stock market performance, and inflation will be explored by this paper. Monetary policy is implemented by increasing or decreasing the interest rates that is in theory would be able to inversely increase or decrease the supply of currency in circulation. In fine the monetary policy of a country controls the amount or volume of currency in circulation to stimulate growth or maintain the stability of its economy. ...
Download paper

Summary

Monetary Policy and the Stock Market Abstract Contents Abstract 2 Contents 3 Introduction 3 Literature Review 5 Empirical Framework 8 Data Description 16 China 16 United States 17 Empirical Results 17 Conclusion 17 References 18 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…
Author : tevinaufderhar

Related Essays

Economic Indicators' Impact on Different Stock Categories
While every indicator is an important measure of a facet of the economy, do all of them influence the stock markets equally? Hence the importance to know is which of these indicators influence the stock markets most, and probably more importantly which economic indicators most influence which types of stocks. For an investor, knowing which key economic affect the stock prices most can be of paramount importance, especially if they are in the stock market for the short-term. Different families of stocks provide different returns, which means that different investors, based on their appetite for…
25 pages (6275 words) Research Paper
Monetary Policy and the Stock Market
Stock market fluctuations often decide the financial state of an economy. These, in turn, could act as the decisive forces behind the monetary policy framework of an economy. Movements adapted by stock market indices often reflect the behaviour patterns exhibited by many essential economic variables. Stock market indices might be regarded as a mirror image of the way their components behave over time. In case that these components exhibit an average upward trend, the implication is that of a rising stock price index, while they display a downward trend implies the stock prices moving down on…
24 pages (6024 words) Essay
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…
24 pages (6024 words) Dissertation
Monetary Policy and the Stock Market: Empirical Evidence from the UK
1. INTRODUCTION: 1.1. Overview and Background of the Research Study: Different research studies have been conducted in order to identify and explore the relationship between the monetary policy and stock market. The central bank has always been under pressure to come up with appropriate monetary policy in order to regulate inflation and output gap in the economy. It is important to explore and understand the relationship between monetary policy and other important economic indicators. For this purpose, one should first able to comprehend the main concept of monetary policy and important…
26 pages (6526 words) Dissertation
Monetary policy and Stock Market
Further, in reference to the goal of price stability, whether prices of assets should be within the purview of stabilization goals is a contended issue. As Alan Greenspan (1996) pointed out, it is unclear regarding which prices really matter. Prices of goods and services in current circulation which constitutes the current inflation figures are definitely critical for the long term stable growth of the economy, but do prices of goods or services to be produced in future, or rather prices of assets which are essentially claims on goods and services to be produced in the future also warrant such…
20 pages (5020 words) Dissertation
Analyzing the Stock Market Crash
The other stock market crash discussed in the paper followed in 1997 which occurred in Asian countries. The crisis occurred due to the increase of foreign debt and some poor policies regarding the devaluation of currency. The crisis was followed by Russian crisis which occurred in 1998 and referred to as currency crisis which was mainly due to the domestic problems of the country which took everyone by surprise. The paper discusses another stock market crisis of dot-com bubble which rose due to the rapid expansion of internet based companies which severely damaged the stock market. The crisis…
40 pages (10040 words) Dissertation
Monetary Policy and the Stock Market: Empirical Evidence from Nigeria
The major findings include the impact of long run monetary policy on the stock market returns of Nigeria. The stock market returns get reduced because of high rate of Treasury Bill. This provides the evidence that efforts in monetary policy contributes in slowing down the economy. The returns in stock market witness a positive effect from current interest rate and interest rate lagged by one period. The sign of lagged error correction is negative. The feature of the variance decomposition results is that the sources of fluctuations of returns are largely due to shocks in stock market as well…
4 pages (1004 words) Research Proposal
Got a tricky question? Receive an answer from students like you! Try us!