Share buybacks limits monetary policy- BdF paper

The Banque de France

Share buy-backs by US firms limits the transmission of monetary policy, a working paper published by the Banque de France finds.

In Share buybacks, monetary policy and the cost of debt, Assia Elgouacem and Riccardo Zago note that it has become common for US firms to buy back their own equities since the practice was made lawful in 1985.

They find that “firms finance these operations mostly through newly issued corporate bonds”. They find evidence that this is largely due to “exogenous

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