Abstract

Our panel has been asked to consider the interaction of markets and policy. In my remarks today, I will specifically consider the interaction between the stock market and the monetary policy of the Federal Reserve, which is set to foster economic conditions that achieve the dual-mandate objectives of maximal employment and price stability (targeted as a 2 percent inflation rate). I want to reconcile seemingly conflicting evidence when we interpret the stock market in its aggregate and when we consider an individual firm that trades in the market.

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Citation

Hodrick, Laurie Simon. "The Interaction of Markets and Policy: A Corporate Finance Perspective." In Strategies for Monetary Policy, 263-268. Stanford: Hoover Institution Press, 2020.

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