Monetary policy and rational asset price bubbles
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- dc.contributor.author Galí, Jordi, 1961-ca
- dc.date.accessioned 2016-03-18T10:50:08Z
- dc.date.available 2016-03-18T10:50:08Z
- dc.date.issued 2014ca
- dc.description.abstract I examine the impact of alternative monetary policy rules on a rational asset price bubble, through the lens of an overlapping generations model with nominal rigidities. A systematic increase in interest rates in response to a growing bubble is shown to enhance the fluctuations in the latter, through its positive effect on bubble growth. The optimal monetary policy seeks to strike a balance between stabilization of the bubble and stabilization of aggregate demand. The paper’s main findings call into question the theoretical foundations of the case for “leaning against the wind” monetary policies. (JEL E13, E32, E44, E52, G12)en
- dc.description.sponsorship The research leading to these results has been partly funded by the European Research Council under the European Union’s Seventh Framework Programme (FP7/2007-2013) / ERC Grant agreement No. 339656.
- dc.format.mimetype application/pdfca
- dc.identifier.citation Gali J. Monetary policy and rational asset price bubbles. American Economic Review. 2014;104(3):721-52 DOI: 10.1257/aer.104.3.721ca
- dc.identifier.doi http://dx.doi.org/10.1257/aer.104.3.721
- dc.identifier.issn 0002-8282ca
- dc.identifier.uri http://hdl.handle.net/10230/26013
- dc.language.iso engca
- dc.publisher American Economic Associationca
- dc.relation.ispartof American Economic Review. 2014;104(3):721-52
- dc.relation.projectID info:eu-repo/grantAgreement/EC/FP7/339656ca
- dc.rights © American Economic Association. Can be found at http://dx.doi.org/10.1257/aer.104.3.721ca
- dc.rights.accessRights info:eu-repo/semantics/openAccessca
- dc.subject.keyword Monetary policy rules
- dc.subject.keyword Stabilization policies
- dc.subject.keyword Asset price volatility
- dc.title Monetary policy and rational asset price bubblesca
- dc.type info:eu-repo/semantics/articleca
- dc.type.version info:eu-repo/semantics/acceptedVersionca