The financial crisis of 2007-09 has led to a rethinking of the role of monetary and financial regulatory policy. It has also called into question the benefits of financial innovation and monetary policy that focuses solely on inflation and the output gap. This paper discusses financial...

In 1994 the Federal Reserve System moved to a more transparent reporting of monetary policy. In this paper we first discuss the evolution of Federal Reserve transparency in U.S. and second we test its effectiveness. We assess the empirical impact of monetary policy transparency on the...

Among the various shocks that may cause financial instabilities, the bursting of asset bubbles has received most attention during the last decade. This paper discusses the risk management of financial instabilities caused by asset price crashes and evaluates the appropriate role of central...

What is the influence of stock market valuations on monetary policy? This paper uses a forward looking Taylor rule model to examine empirically if monetary policy, since the October 19, 1987 stock market crash, has been influenced by the valuation of the stock market as measured by the Samp;P...

This paper argues that the Fed was not stock market bubble-neutral during the last several years. This nonneutrality implies two options: first, the Fed has used monetary policies to prevent the building of the stock market bubble or, second, the Fed has contributed to its development and...

This paper addresses three important questions: how should monetary policy respond to stock market booms, what causes stock market bubbles and can monetary policy pop them. These questions arose during the recent stock market bubble during 1995-2000 and its collapse during 2000-1. To answer...

In 1994 the Federal Reserve System moved to a more transparent reporting of monetary policy. In this paper we first discuss the evolution of Federal Reserve transparency in U.S. and second we test its effectiveness. We assess the empirical impact of monetary policy transparency on the...

Recently Chairman Greenspan (2003 and 2004) has discussed a risk management approach to the implementation of monetary policy. This paper explores the economic environment of the 1990s and the policy dilemmas the Fed faced given the stock boom from the mid to late 1990s to after the bust in...