Asset inflation and monetary policy

C.P. Kindleberger
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C.P. Kindleberger: Massachusetts Institute of Technology

BNL Quarterly Review, 1995, vol. 48, issue 192, 17-37

Abstract: Asset inflation is characterised by an increase in the prices of assets while output prices are relatively stable or on a decline. In the event of asset inflation, international coordination of monetary policy is an observable trend. For instance, in 1989, when Japan was at the worst phase of the recession, the Bank of Japan lowered interest rates and the US and German discount rates also declined at the same time. However, most mainstream economists believe that monetary policy should be aimed at the stability of the general price level rather than zeroing on asset prices. The nature, importance and historical evolutionary of concern with asset inflation are discussed.

Keywords: Interest rates; Asset-backed securities; Asset backed securities (search for similar items in EconPapers)
JEL-codes: E31 E52 (search for similar items in EconPapers)
Date: 1995
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Citations: View citations in EconPapers (11)

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