The Impact of Monetary Policy and Central Bank Information Shocks on U.S. Stock Market Bubble Dynamics: The Role of Deregulation

We examine whether the responses of U.S. stock-market bubble indicators to two distinct components of Federal Reserve announcements vary with the lagged deregulation state: conventional monetary-policy (MP) shocks and central-bank-information (CBI) shocks. The monthly analysis covers February 1990--May 2025 and uses six multi-scale LPPLS confidence indicators that distinguish positive and negative episodes at short, medium, and long horizons. A news-based deregulation index enters with a one-month lag. Linear, interaction, varying-coefficient, and smooth-transition local projections distinguish average responses from variation across regulatory states. In a 6-lag linear validation, CBI shocks show more consistent cumulative responses than conventional MP shocks, both with and without lagged deregulation as a control. Observed-state P90--P10 contrasts from the interaction local projections indicate that conventional MP responses vary with deregulation, most clearly for short- and medium-horizon positive-bubble indicators. Direct CBI responses are directionally consistent, but the corresponding P90–P10 contrasts do not support systematic CBI amplification as deregulation rises. For the linear benchmark, simultaneous confidence bands remove isolated pointwise horizon findings. These findings describe how the responses of LPPLS confidence indicators to monetary announcement shocks vary with the deregulation state.