Should central banks respond to asset price bubbles? This paper explores this monetary policy question in a … hypothetical economy subject to asset price bubbles. Despite the highly stylized structure of the model, the results reveal several …

Most of the economic theory delves into monetary policy based intervention in the event market experiences an asset … policy implementation and its resultant effects raises doubts as to the viability of such an intervention to tackle bubbles … that bubbles evolve in few sectors of the economy. The 90's dot com and recent real estate bubble require focused …

that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the …