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Monetary Policy, Asset-Price Bubbles and the Zero Lower Bound

Robinson, Tim - 2005

will be optimal varies from one type of bubble to another and, for certain bubbles, from one period to the next. It is …

Persistent link: https://www.econbiz.de/10012467580

Monetary Policy for a Bubbly World

Asriyan, Vladimir - 2016

We propose a model of money, credit and bubbles, and use it to study the role of monetary policy in managing asset … bubbles. In this model, bubbles pop up and burst, generating fluctuations in credit, investment and output. Two key insights … emerge from the analysis. First, the growth rate of bubbles, which is driven by agents' expectations, can be set in real or …

Persistent link: https://www.econbiz.de/10012456041

Monetary Exchange in Over-the-Counter Markets : A Theory of Speculative Bubbles, the Fed Model, and Self-fulfilling Liquidity Crises

Lagos, Ricardo - 2015

We develop a model of monetary exchange in over-the-counter markets to study the effects of monetary policy on asset prices and standard measures of financial liquidity, such as bid-ask spreads, trade volume, and the incentives of dealers to supply immediacy, both by participating in the...

Persistent link: https://www.econbiz.de/10012457141

The Effects of Monetary Policy on Stock Market Bubbles : Some Evidence

Gali, Jordi - 2014

"conventional" view on the effects of monetary policy on bubbles, as well as with the predictions of bubbleless models. We also …

Persistent link: https://www.econbiz.de/10012458683

Does Expansionary Monetary Policy Cause Asset Price Booms; Some Historical and Empirical Evidence

Bordo, Michael D. - 2013

In this paper we investigate the relationship between loose monetary policy, low inflation, and easy bank credit with asset price booms. Using a panel of up to 18 OECD countries from 1920 to 2011 we estimate the impact that loose monetary policy, low inflation, and bank credit has on house,...

Persistent link: https://www.econbiz.de/10012459076

Monetary Policy and Rational Asset Price Bubbles

Galí, Jordi - 2013

I examine the impact of alternative monetary policy rules on a rational asset price bubble, through the lens of an overlapping generations model with nominal rigidities. A systematic increase in interest rates in response to a growing bubble is shown to enhance the fluctuations in the latter,...

Persistent link: https://www.econbiz.de/10012459855

Pride Goes Before a Fall : Federal Reserve Policy and Asset Markets

Reinhart, Carmen M. - 2011

Considerable debate rages about whether Federal Reserve policy was too lax in the early part of the 2000s, thereby fueling the home-price bubble that was the proximate cause of the global financial crisis. We present evidence that the view that modest alterations to monetary policy have vast...

Persistent link: https://www.econbiz.de/10012461842

Measuring the Macroeconomic Risks Posed by Asset Price Booms

Cecchetti, Stephen G. - 2006

Modern central bankers are the risk managers of the financial system. They take actions based not only on point forecasts for growth and inflation, but based on the entire distribution of possible macroeconomic outcomes. In numerous instances monetary policymakers have acted in ways designed to...

Persistent link: https://www.econbiz.de/10012466123

Boom-Busts in Asset Prices, Economic Instability, and Monetary Policy

Bordo, Michael D. - 2002

The link between monetary policy and asset price movements has been of perennial interest to policy makers. In this paper we consider the potential case for pre-emptive monetary restrictions when asset price reversals can have serious effects on real output. First, we provide some historical...

Persistent link: https://www.econbiz.de/10012469748

Monetary Policy and Asset Price Volatility

Bernanke, Ben - 2000

We explore the implications of asset price volatility for the management of monetary policy. We show that it is desirable for central banks to focus on underlying inflationary pressures. Asset prices become relevant only to the extent they may signal potential inflationary or deflationary...

Persistent link: https://www.econbiz.de/10012471216