Research Briefs·Jun 17, 2024

Inflation and Trading

Beliefs about how inflation impacts asset returns vary widely across investors, who are often overly optimistic. Information about past returns during periods of high inflation causes investors to update their beliefs, which feeds into their return expectations and subsequent trading behavior.
Michael Weber, Philip Schnorpfeil, and Andreas Hackethal
Based on BFI Working Paper No. 2024-61, “Inflation and Trading”
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Research Briefs·Jun 12, 2024

Discount Factors and Monetary Policy: Evidence from Dual-Listed Stocks

Quentin Vandeweyer, Minghao Yang, and Constantine Yannelis
Surprise changes in US monetary policy rates directly affect asset prices, with a 100-basis point surprise cut resulting in a 30-basis point increase in the ratio of stock prices over 5 days; this effect grows after the initial announcement because...
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Research Briefs·Apr 16, 2024

Sticky Discount Rates

Masao Fukui, Niels Gormsen, and Kilian Huber
Firms often keep their nominal discount rates constant even in the face of changing inflation expectations. Increases in expected inflation therefore lower firms’ real discount rates and raise real investment.
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Research Briefs·Apr 11, 2024

On Digital Currencies

Harald Uhlig
In a work summarizing his previous research, the author argues that prices of private digital currencies follow random walks, while for central bank digital currencies the challenge is to address three objectives, price stability, efficiency, and monetary trust, of which...
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