The impact of large-scale asset purchases on the S&P 500 index,long-term interest rates and unemployment

After the bankruptcy of Lehman Brothers in September 2008 and the financial panic that ensued, the Federal Reserve moved rapidly to reduce the federal funds rate to .25%. It was quickly judged that additional measures were needed to stabilize the US economy. Beginning in December 2008, the Federal Reserve Bank initiated three rounds of unconventional monetary policies known as quantitative easing (QE). These policies were intended to reduce long-term interest rates when the short-term federal funds rates had reached the zero lower bound and could not become negative. It was argued that the lowering of longer-term interest rates would help the stock market and thus the wealth of consumers. This article carefully investigates three hypotheses: QE impacting long-term interest rates, QE impacting the stock market and QE impacting unemployment using a Markov regime switching methodology. We conclude that QE has contributed significantly to increases in the stock market but less significantly to long-term interest rate and unemployment.     

The impact of 11/13 Paris terrorist attacks on stock prices: evidence from the international defence industry

This study explores the effect of the Paris terrorist attacks on the stock returns and the volatility for the most important companies in the global defence industry. To this end, it employs the General Autoregressive Conditional Heteroscedasticity methodology. The findings clearly indicate that this terrorist event has a positive impact on both the returns and the volatility of these stocks.