to larger bubbles. This comment shows that a central bank that wants to dampen bubbles can always do so by raising …

We study whether a central bank should deviate from its objective of price stability to promote financial stability. We … financial crises. We compare several interest rate rules, under which the central bank responds more or less forcefully to … short run (through aggregate demand) and in the medium run (through capital accumulation). Second, a central bank can both …