Courtney Wiegand

Working Papers

The Effect of Fiscal Policy Shocks on Asset Prices

[Job Market Paper]

Marshall Blume Prize (2026, Honorable Mention), Herman E. Krooss Prize

Fiscal policy is less understood in financial markets than monetary policy due to the lack of high-frequency shocks. I construct such shocks by tracking revisions to forward-looking deficit targets throughout the Congressional budget resolution and reconciliation process. The shocks are unpredictable yet move deficit forecasts. A 1% deficit-to-GDP shock raises 10-year yields by 2.3 bps, two-thirds through real rates. Deficit news raises term premiums and lowers Treasury convenience yields. Stock market effects combine discount rate and cash flow channels, with the latter dominating at the ZLB. Growth-sensitive industries respond positively, suggesting a fiscal multiplier that monetary policy offsets when unconstrained. 

Monetary Policy Uncertainty: Sources and Consequences

with Marcelo Ochoa

Why do stocks and bonds sometimes hedge each other and sometimes move together? We show that an unexplored explanation lies in the source of uncertainty about the future path of monetary policy. Using daily revisions in policy rate expectations, we decompose a novel market-based measure of policy path uncertainty into macroeconomic uncertainty and uncertainty about the Federal Reserve's reaction function. These two components generate sharply different macroeconomic dynamics. Macroeconomic uncertainty lowers output and inflation, prompting monetary policy easing, while reaction function uncertainty produces stagflationary pressures and monetary policy tightening. These contrasting dynamics carry through to financial markets.  Both uncertainty sources reduce equity valuations, but macroeconomic uncertainty lowers Treasury yields whereas policy response uncertainty raises yields through higher real term premia. Consequently, stock-bond correlations turn negative when macroeconomic uncertainty dominates and positive when reaction function uncertainty prevails. Our decomposition thus provides a structural explanation for why the stock-bond correlation switches sign over time.

Works In Progress

Treasury Market Liquidity and Spillovers

with Yannis Cabossioras and Julia Selgrad 

Financial Markets and Heterogeneity within the Federal Reserve

with Gurubala Kotta 

Cross-Sectional Stock Market Response to Government Spending Shocks: Exposure to 302(a) Allocations

Fiscal Policy Reach in Times of Crisis: Credit Utilization of Firms Without PPP Loans