This is a past event
The seminar will be held on campus in the SDR Library Seminar Room 224 on Feburary 21st from 3pm - 4:30pm.
Join Dr Samer Adra from the University of Sheffield as they discuss their research on "Fed Information Shocks".
Abstract: The macroeconomic assessments inferred from the Fed’s decisions, despite not offering new information to professional forecasters and rational equity investors, are treated as “information shocks” by a relevant market segment. With the Fed’s growing influence over time, we conjecture that the tendency to develop category learning behavior leads a part of the equity investing base to increasingly rely on the Fed to gauge the state of the economy. As a result, these Fed followers’ propensity to trade becomes increasingly dependent on the ability to infer positive economic insights from Fed decisions. We present empirical evidence supporting our predictions. We show that the perceived Fed information shocks strongly influence the liquidity of shares that are thinly traded and influenced by pessimistic sentiment. These stocks experience a rise (decline) in liquidity in direct response to Fed information shocks that reflect a positive (negative) macroeconomic assessment. These effects became more prevalent after the 2008 financial crisis.
- Speaker
- Dr Samer Adra
- Hosted by
- University of Aberdeen
- Venue
- The Sir Duncan Rice Library
- Contact
-
No booking required.