information effects

New paper on (or rather against) the "Fed Information Effect"

Eric Swanson and I have written a new paper where we question the evidence for the “Fed information effect” documented in the recent macro-finance literature. We propose an alternative channel that explains the available evidence, namely that the Fed simply responds to publicly available economic news. We call it the “Fed response to news” channel and present strong new evidence in favor of this channel and against the “Fed information effect.