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Federal Reserve Monetary Policy and US Hospitality Stock Returns

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  • Ming-Hsiang Chen

    (Department of Finance, National Chung Cheng University, Chia-Yi, Taiwan, ROC)

Abstract

This study examines the impact of the Federal Reserve (Fed) monetary policy on US hospitality stock returns. Specifically, this research paper investigates the stock performance of US hospitality firms under different Fed monetary policy regimes. Hospitality companies include gambling firms, lodging companies and restaurants. Changes in the discount rate and federal funds rate are used to measure shifts in the Fed monetary policy and to classify the full monetary policy period as either a restrictive or an expansive monetary policy environment. An expansive monetary condition is a period with a decrease in the discount or federal funds rate; a restrictive monetary environment experiences an increase in the discount or federal funds rate. Empirical test results reveal that the influence of the two monetary policy indicators on hospitality stock returns varies to a great extent. The stock returns of US restaurants are related significantly to changes in the federal funds rate. However, changes in the discount rate generally have no strong impact on US hospitality stock returns.

Suggested Citation

  • Ming-Hsiang Chen, 2010. "Federal Reserve Monetary Policy and US Hospitality Stock Returns," Tourism Economics, , vol. 16(4), pages 833-852, December.
    • Handle: RePEc:sae:toueco:v:16:y:2010:i:4:p:833-852
    DOI: 10.5367/te.2010.0001
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    References listed on IDEAS

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    Cited by:

    1. Ming-Hsiang Chen, 2014. "Cyclical Variation in the Effect of Federal Funds Target Rate Surprises on Hospitality Index Returns," Tourism Economics, , vol. 20(2), pages 373-387, April.
    2. Leo Huang & Michael Chang, 2018. "Why do travel agencies choose to undergo IPOs in Taiwan?," Tourism Economics, , vol. 24(1), pages 79-91, February.
    3. Michaël Dewally & Susan M.V. Flaherty & Yingying Shao, 2017. "Determinants of financial policy in the hospitality sector in the United States," Tourism Economics, , vol. 23(3), pages 523-542, May.
    4. Uju Violet Alola & Ojonugwa Usman & Andrew Adewale Alola, 2023. "Is pass-through of the exchange rate to restaurant and hotel prices asymmetric in the US? Role of monetary policy uncertainty," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 9(1), pages 1-19, December.
    5. Michaël Dewally & Yingying Shao & Dan Singer, 2013. "The Liquidity Crisis: Evidence from the US Hospitality Industry," Tourism Economics, , vol. 19(3), pages 545-563, June.

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