Risk Aversion, Uncertainty, and Monetary Policy in Unconventional Environments

Using traditional monetary policy measures, Bekaert et al. (2013) show that a lax monetary policy decreases both risk aversion and uncertainty and that positive shocks to risk aversion and uncertainty induce monetary policy changes. We extend their analysis for the pre-crisis period to the post-crisis period using recently developed monetary policy measures that take unconventional environments into consideration. Empirical findings show that the results of Bekaert et al. (2013) persist for the post-crisis period only when such monetary policy measures are applied