U.S.Stock Market Crashes and Their Aftermath: Implications for Monetary Policy

Eugene White () and Frederic Mishkin ()

Departmental Working Papers from Rutgers University, Department of Economics

Abstract: This paper examines fifteen historical episodes of stock market crashes and their aftermath in the United States over the last one hundred years. Our basic conclusion from studying these episodes is that financial instability is the key problem facing monetary policy makers and not stock market crashes, even if they reflect the possible bursting of a bubble. With a focus on financial stability rather than the stock market, the response of central banks to stock market fluctuations is more likely to be optimal and maintain support for the independence of the central bank.

Keywords: Stock Market (search for similar items in EconPapers)
Date: 2002-05-30
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Working Paper: U.S. Stock Market Crashes and Their Aftermath: Implications for Monetary Policy (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:rut:rutres:200208

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