Liquidity Injections May Have Driven the Stock Market Recovery

Posted: 14 Jul 2020

See all articles by Shyam Sunder

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Date Written: June 17, 2020

Abstract

The Fed has responded to sharp drops in stock prices for two decades by pumping massive amounts of liquidity into the economy—creating a not-so-unreasonable expectation that future declines may elicit a similar response. Field and experimental evidence supports the price-raising effect of increased money supply.

Keywords: stock prices, quantitative easing, liquidity, money supply

JEL Classification: E44, E51, E58, G28

Suggested Citation

Sunder, Shyam, Liquidity Injections May Have Driven the Stock Market Recovery (June 17, 2020). Available at SSRN: https://ssrn.com/abstract=3631143

Shyam Sunder (Contact Author)

Yale University - School of Management ( email )

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203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

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