This paper investigates the effect of monetary policy on stock market bubbles and trading behavior in experimental … observe a strong impact of our interest rate policy on liquidity in the stock market but only a small impact on bubbles …. However, we find that announcing the possibility of reserve requirements significantly reduces bubbles even when such …

on prices, risk premia, asset price bubbles, and financial stability. Bubble risk premia arise from an interaction … adjusted risk and bubble risk premia increase. We propose a new framework for monetary policy with respect to bubbles. What …/pessimists). Accommodative policy can lead to a larger fraction of trading constrained agents that disagree, larger bubbles, and increased …

of restrictive monetary policy shocks coincides with the phase of the business cycle in which bubbles arise …

relationship to bubbles. My conclusion is that mistaken U.S. monetary policy, usually related to the Fed's indifference to the … value of the dollar, has repeatedly caused harmful asset bubbles in the United States and abroad. Policy is again at risk … “quantitative easing”). Regulatory policy has often been ineffective at identifying or addressing asset bubbles, especially those …

This paper examines how monetary expansion causes asset bubbles. When there is no monetary expansion, a bubbly asset is …