Price pressure around unconventional monetary and fiscal policies

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Speaker: Professor Richard Priestley, BI Norwegian Business School

About the seminar topic

Unconventional monetary and fiscal policies cause disequilibrium in desired money holdings. This provides an increase in aggregate liquidity that is partially rebalanced into stock and corporate bond markets. A novel measure of this disequilibrium shows that rebalancing of excess money balances creates price pressure and hence predictable returns. These policies increased annual equity excess returns by 1.5% over and above that related to cash flow and discount rate risks. Since the financial benefits of higher prices accrue mostly to the right tail of the wealth distribution of households, that is, asset holders, a downside of these policies is that they exacerbated wealth inequality.

Speaker bio

Richard Priestley is a Professor in the Department of Finance at BI Norwegian Business School. His research has been published in leading journals such as the Journal of Finance, Review of Financial Studies, Journal of Financial Economics, Management Science, Review of Finance, Economic Journal, Journal of Financial and Quantitative Analysis, Journal of Money Credit and Banking, Journal of Economic Dynamics and Control, and the Journal of Business.

He was the head of the department of finance at BI from 2011 to 2021 where he led an expansion of the department both in terms of the programmes offered, the faculty base and the quality of research output. The department is now ranked as one of the best in Europe and now has over 500 students on various undergraduate and postgraduate finance programmes. His research interests span asset pricing, macro-finance, monetary policy and financial markets, international finance and payout policies.

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No registration required. If you have any questions about this seminar, please email Bet Brooke.