1.A positive demand shock pushes up inflation and GDP and boosts equities and yields. As demand shocks are unobservable in real time, we assume asset purchase announcements do not react in the same period.
2.A negative supply shock pushes up inflation but reduces GDP. The effects on yields and equities are not restricted. As with demand shocks, we assume asset purchase announcements do not react in the same period.
3.An asset purchase shock is assumed to raise equity prices and asset purchases.
4.In contrast, an adverse uncertainty shock lowers equity prices and is assumed to lead to more asset purchases.
2.A negative supply shock pushes up inflation but reduces GDP. The effects on yields and equities are not restricted. As with demand shocks, we assume asset purchase announcements do not react in the same period.
3.An asset purchase shock is assumed to raise equity prices and asset purchases.
4.In contrast, an adverse uncertainty shock lowers equity prices and is assumed to lead to more asset purchases.