Precios de activos y política monetaria en la nueva síntesis neoclásica

The paper is aimed at assessing the theoretical debate as to whether an inflation-targeting-central-bank should react to asset price movements. The main theoretical tenets of the debate, the canonical model of the New Neoclassical Synthesis and the two main competing hypotheses of the debate are both explained and discussed. By way of conclusion, it is argued that the rate of interest is not a suitable policy instrument for preventing irrational exuberance and boom-bust cycles in the asset markets.