Measuring the Impact of Monetary and Fiscal Policy on the Economy and the Market

This is a study attempting to statistically measure the impact of Government policies on the economy and  the stock market. The “causal” Government policies considered include:

 

1) Fiscal Policy, entailing Budget Deficit spending;

2) Monetary Policy with the Federal Reserve managing the Federal Funds rate; and

3) Monetary Policy with the Federal Reserve conducting large purchases of securities (Treasuries, MBS);

The dependent or impacted macroeconomic variables affected by the above Government policies will  include:

a) The overall economy (RGDP);

b) Inflation (CPI);

c) Unemployment Rate; and

d) Stock market.

 

        Despite an extensive amount of work, I was truly unable to statistically measure a causal impact of the mentioned causal independent variables (Government policies) on the dependent ones (the economy, the market, etc.).  Nevertheless, I still found doing this statistical exercise very informative.  You can find the work at the following link:  

 

Macroeconomic Relationships