Francesco Franzoni, 03 June 2019

The asset management industry has become increasingly concentrated in recent decades. Regulators are concerned about the systemic risks this may pose. Using data from the US, this column suggests that the increased concentration has led to more volatile prices of stocks held by large institutional investors. This poses challenges for regulators trying to weigh price efficiency and economies of scale.

Stefano Ramelli, Alexander Wagner, Richard Zeckhauser, Alexandre Ziegler, 29 October 2018

President Trump’s election and the nomination of Scott Pruitt to lead the Environmental Protection Agency changed expectations of US climate change policy. This column uses movements in US stock prices to show that firms with high carbon intensity benefited, as expected, but so did firms with ‘responsible’ strategies on climate change. A significant group of investors raise the value of firms taking a long-term perspective. 

Peter Karadi, Marek Jarociński, 03 October 2018

Central bank announcements simultaneously convey information about monetary policy and the economic outlook. This column uses changes in interest rate expectations and stock prices around the time of policy announcements of the Federal Reserve to disentangle the impact of news about monetary policy from that of news about the economic outlook. It finds that both pieces of information play a significant role in the dynamics of inflation and economic growth. Controlling for news about the economy provides a more accurate measure of the transmission of monetary policy.

Andreas Neuhierl, Michael Weber, 31 August 2018

Equity markets are known to move in a predictable manner immediately after policy decisions. This column provides evidence of large predictable movements in stock prices 25 days before policy actions in the US. The shocks continue for another 15 days, and average 4.5%. It suggests monetary policy shocks might not be shocks after all, and that we might be underestimating the effect of monetary policy on asset prices and real consumption.

Lubos Pastor, Pietro Veronesi, 25 May 2017

Since 2000, political uncertainty has had a strong influence on market volatility in the US. Since Donald Trump became president, however, high policy uncertainty has not translated into high market volatility. Building on a theoretical framework linking stock prices and political news, this column argues that the US market does not respond to political uncertainty because political news coming from the new administration has been unreliable and difficult for investors to interpret. 

Alexander Wagner, Richard Zeckhauser, Alexandre Ziegler, 24 February 2017

The election of Donald Trump as president of the United States will profoundly affect the US and world economies. This column argues that the stock market has already identified winners and losers among companies and industries. It finds, for example, that investors expect US firms paying high taxes to be relative winners from the Trump presidency, and firms with substantial foreign involvement to be relative losers.   

Cristina Cella, Andrew Ellul, Mariassunta Giannetti, 08 January 2011

As stock markets plummeted, short-sellers and hedge funds have been the subject of public anger. But does it matter who owns stock? This column compares stock performance after the collapse of Lehman Brothers in 2008. It finds that companies whose shares are held to a larger extent by short-term investors do indeed experience more severe price drops and larger price reversals.

Events

CEPR Policy Research