Monetary Policy and the Stock Market: Some International evidence

Luis Angeles ()

Working Papers from Business School - Economics, University of Glasgow

Abstract: This paper presents a model where opening the capital account of an economy causes more bankruptcies to take place in the non tradables sector. Non tradable arms must forecast the future state of the economy when investing since the demand for their goods depends on this. In our model the interest rate is a powerful signal that non tradable arms use when the capital account is closed, but its informational content decreases once the capital account opens up and international (as well as domestic) shocks affect it.

JEL-codes: F36 F41 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:gla:glaewp:2006_13

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