Monetary policy and asset price bubbles: calibrating the monetary policy trade-offs

Andrew Filardo ()

No 155, BIS Working Papers from Bank for International Settlements

Abstract: The issue of monetary policy and asset prices has been receiving much attention not only because it is an interesting topic for macroeconomists but also because central banks have faced daunting challenges from large swings in various types of asset prices. To some extent, the achievement of a low, stable inflation environment has not simultaneously brought about a more stable asset price environment. The record over the past decade, in fact, has raised the prospect of asset price booms and busts as a permanent feature of the monetary policy landscape. This paper lays out a general framework to explore some of the key monetary policy trade-offs presented by asset prices, with particular emphasis on the role of asset price bubbles.

Keywords: Monetary; policy; and; asset; price; bubbles:; calibrating; the; monetary; policy; trade-offs (search for similar items in EconPapers)
JEL-codes: E5 G1 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (65)

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