This paper addresses the question of whether and how easy monetary policy may lead to excesses in financial and real asset markets and ultimately result in financial dislocation. It presents evidence suggesting that periods when short-term interest rates have been persistently and significantly...

This paper addresses the question of whether and how easy monetary policy may lead to excesses in financial and real asset markets and ultimately result in financial dislocation. It presents evidence suggesting that periods when short-term interest rates were persistently and significantly below...

In the past decade, the financial markets have been hit twice by crisis, followed each time by recession (Enron, subprime). Three theories are presented to explain the dynamics of share prices: rational expectations, behavioral finance, and an institution-oriented theory. Institutional investors...