What Should Monetary Policy do in the Face of Soaring Asset Prices and Rampant Credit Growth?

Anne Epaulard

Revue de l'OFCE, 2018, vol. N° 157, issue 3, 283-298

Abstract: In the aftermath of the financial crisis macroeconomists once again took an interest in the options offered by monetary policy to deal with asset price bubbles. Empirical studies seem to show that the soaring debt of agents is more dangerous than the soaring prices of financial assets. Macroprudential tools now appear to be able to limit the amplitude of cycles of indebtedness. The debate is henceforth focusing on the last resort role left to monetary policy in cases where the implementation of macroprudential tools will not be sufficient.

Keywords: monetary policy; asset prices; financial cycle; macroprudential policy (search for similar items in EconPapers)
Date: 2018
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