Asset-price Bubbles and Monetary Policy
نویسنده
چکیده
for helpful discussions and comments, and to Pam Dillon and Paula Drew for assistance in preparing this document. The views expressed are those of the authors and should not be attributed to the Reserve Bank of Australia.
منابع مشابه
Should Monetary Policy Respond to Asset Price Bubbles? Some Experimental Results
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 practical monetary policy lessons. First, a monetary authority should generally respond to asset prices as long as asset prices contain reliable information ...
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One of the most important issues facing central banks is whether they should respond to potential asset-price bubbles. Because asset prices are a central element in the transmission mechanisms of monetary policy, the issue of how monetary policy might respond to asset-price movements is not whether it should respond at all but whether it should respond over and above the response called for in ...
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We present a simple macroeconomic model that includes a role for an asset-price bubble. We then derive optimal monetary policy settings for two policymakers: a skeptic, for whom the best forecast of future asset prices is the current price; and an activist, whose policy recommendations take into account the complete stochastic implications of the bubble. We show that the activist’s recommendati...
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Three years ago at this same conference, I was given an opportunity to talk about Japans monetary policy in the years when asset price bubbles expanded.1 Today, I would like mainly to review monetary policy in the following phase when the bubbles burst, for an asset price swing is the changing economic environment most relevant to us. Incidentally, we are now in the third phase when the econ...
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The subject of the paper by David Gruen, Michael Plumb and Andrew Stone — how monetary policy should respond to asset prices — is obviously an important one. The formation of bubbles in asset prices and the eventual demise of those bubbles have the potential to cause damage to our economic and fi nancial systems. Macroeconomic instability in the form of unwelcome variability of output and infl ...
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Periodically, some group of asset prices rises at a rapid pace that is matched neither by general price inflation nor seemingly by the relevant fundamental asset values. This situation rightfully causes great consternation at central banks, as it has dangerous implications for the stability of inflation and full employment and for financial stability. Some asset prices, such as those for housin...
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