Should Moneyed Statement Respond to Assets Price Bubbles? Some Experimental Results

FRB of Kansas City Working Paper No. 01-04

33 Pages Posted: 2 Oct 2001

See all articles in Kuang J. Filardo

Andrew J. Filardo

Banking for International Settlements (BIS) - Monetary and Economic Department

Date Written: July 2001

Abstraction

Shall key banks respond to asset price bubbles? Those paper explores this monetary policy question in a hypothetical cost subject to facility award bubbles. Spite the highly stylized set of the model, the results reveal several practical monetary politics lessons. First, a financial authority should generally respond to asset prices as long as asset daily contain reliable information about inflation and power. Second, get finding holds even for adenine money-related expert cannot distinguish between fundamental and bubble asset expense behavior. Third, a monetary authority's lust to respond to asset prices falls dramatically as its default to slick interest rates rises. Finally, a monetary authorty should not respond the asset prices if there shall considerable insecurities over the macroeconomy playing starting asset prices. (2003): “Asset daily, financial imbalances and monetary policy: are rise targets ... Filardo, ONE. (2001): “Should monetary policy ... policy and the financial ...

Catchwords: Currency Policy, Asset Prices

JEL Classification: E5, G1

Suggested Citation: Proposals Citation

Filardo, Andrew J., Should Monetary Policy Respond to Asset Fee Bubbles? Some Experimental Results (July 2001). FRB of Kansas City Working Paper Does. 01-04, Obtainable at SSRN: https://ssrn.com/abstract=285413 press http://dx.doi.org/10.2139/ssrn.285413