Semyon Malamud

Biography

In recent research, Prof. Malamud and his coauthor develop a new theory of monetary policy passthrough based on intermediation frictions. The authors show that monetary policy affects intermediaries’ ability to extract rents; this opens up a new channel for the transmission of monetary shocks into rates in the wider economy, which may be labelled the markup channel of monetary policy. Passthrough efficiency depends crucially on the anticipated sensitivity of future monetary policy to future stock market returns, the “central bank put”. The strength of this put determines monetary policy’s room for maneuver: when it is strong, monetary policy is destabilizing and may lead to market tantrums where deteriorating risk premia, illiquidity, and markups mutually reinforce each other; when the put is too strong, passthrough becomes fully inefficient and a surprise easing even begets a rise in real rates.

Research Interest

Asset pricing.