We study the effect of different monetary policy rules on stock and bond risk usinga segmented financial market model. The optimal monetary policy rule in our modelis risk-sharing and countercyclical after shocks in the financial markets. Under thatpolicy, equity is not risky, and its return is...

We study the effects of monetary policy shocks on the growth rates of hiring, employment and earnings of new hires across firms of different sizes. We find that contractionary and expansionary monetary policy shocks have different effects on hiring and employment growth for small and large...

We study whether monetary authorities in the G7 countries were changing their responses to inflation in a similar manner during and following the Great Inflation era. We find that the common to the G7 countries' inflation pattern during the Great Inflation period could be associated with a...

We study the time varying effects of monetary policy on stock returns in order to capture changes over time on this transmission channel. We find that a one-percentage point surprise increase on the federal funds rate decreases the one-day stock return by 1.33% during the period 1989 to 2000 and...

We analyze monetary policy in a heterogeneous firm environment where cash-constrained firms finance operations through external financing and cash-unconstrained firms operate using internal funds. We show that firms respond differently to shocks: expansionary monetary policy sharply increases...