We provide strong evidence of persistent cyclical variation in the sensitivity of stock returns to macroeconomic news announcement (MNA) surprises. When the economy is significantly below trend (output gap is large and negative) and interest rates are not expected to go up, the stock return...

Written Testimony of Lev Menand for the hearing entitled "Building a Stronger Financial System: Opportunities for a Central Bank Digital Currency" before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Subcommittee on Economic Policy

In recent years, warnings of a populist threat to central bank independence have proliferated. These warnings are based on a deep-seated antagonism between technocracy and populism.I argue that to understand current challenges for central banks, we should question the assumed antagonism between...

Does expansionary monetary policy drive up prices of risky assets? Or, do investors interpret monetary policy easing as a signal that economic fundamentals are weaker than they previously believed, prompting riskier asset prices to fall? We test these competing hypotheses within the U.S....

Climate change has the potential to affect all areas of the economy. It’s a threat to the stability of the financial system that could cause more damage than COVID-19 and the 2009 financial crisis combined.There is broad consensus that financial streams need to be redirected into sustainable...

We study credible information transmission by a benevolent short-lived central bank. We consider two possibilities: direct revelation through an announcement, versus indirect transmission through monetary policy. We show that, in the presence of externalities creating a wedge between private and...

We build models with an interest-bearing central bank digital currency (CBDC) to investigate the impacts of issuing CBDC on banking and the macroeconomy. When CBDC is the only asset, a higher interest rate on CBDC does not necessarily lead to financial disintermediation. It could promote bank...

This article investigates the degree of tolerance to higher inflation rates in the short run by the presidents of the Brazilian Central Bank in the period 2001-2012. We used monthly data and various specifications of the Taylor rule were estimated via GMM. In general, the results show the...

We first sketch how central banks have used unconventional monetary policy measures by using three indicators based on the composition of the balance sheet of eleven central banks. Our analysis suggests that although the ECB's balance sheet has increased dramatically during the crisis, the...

Using the HICP (Harmonized Index of Consumer Prices) the author tests the series for the makeup of its dynamic components both before and after the start of stage three of the European Central Bank's (ECB) monetary policy directive. While it appears ECB is meeting its stated objective, it is...