Monetary Policy and Rational Asset Price Bubbles

jordigali, Tue, 02/12/2013

This paper examines the impact of alternative monetary policy rules on a rational asset price bubble, through the lens of an overlapping generations model with nominal rigidities. The paper's main findings call into question the theoretical foundations of the case for "leaning against the wind" monetary policies.

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URL:  www.cepr.org/pubs/dps/DP9355.asp

Topics:  Macroeconomic policy Monetary policy

Tags:  asset-price volatility, leaning against the wind policies, monetary policy rules, stabilisation policies

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