How fiscal policy impacts equity and bond returns is an open question. Unlike previous studies, we address this issue in a way that decomposes current returns into news about cash flows and news about discount rates. Moreover, we use narrative methods to identify plausibly exogenous shocks to...

We study the link between timing of cash flows and expected returns in general equilibrium production economies. Our model incorporates (i) heterogenous exposure to aggregate pro- ductivity shocks across capital vintages, and (ii) an endogenous stock of growth options. Our economy features a...

The stock market rose by 25% between the 2016 election and the day TCJA was signed into law. To determine how much the prospect of tax cuts contributed to this increase, we construct a human-based attribution by examining non-public Market Intelligence from FRBNY for each of the 283 days during...

The key insight from this analysis is that monetary policy should be responding more to negative shocks than positive shocks: optimal monetary policy is asymmetric. Moreover, if we take the stance that asset prices indicate a high cost of exposure to long-run risks, this has very interesting...