Beliefs about how inflation impacts asset returns vary widely across investors, who are often overly optimistic. Information about past returns during periods of high inflation causes investors to update their beliefs, which feeds into their return expectations and subsequent trading behavior.

Surprise changes in US monetary policy rates directly affect asset prices, with a 100-basis point surprise cut resulting in a 30-basis point increase in the ratio of stock prices over 5 days; this effect grows after the initial announcement because higher-frequency strategies likely underestimate the effects of policy transmission.

In a work summarizing his previous research, the author argues that prices of private digital currencies follow random walks, while for central bank digital currencies the challenge is to address three objectives, price stability, efficiency, and monetary trust, of which only two are achievable.