Liquidity Injections May Have Driven the Stock Market Recovery
Posted: 14 Jul 2020
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: 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 )
165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)
HOME PAGE: http://www.som.yale.edu/faculty/sunder/
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