Asset price boom–burst cycle as an elastic money response to technological shocks

Chin-Yoong Wong and Yoke-Kee Eng ()

Economics Letters, 2012, vol. 114, issue 3, 292-295

Abstract: Through a finite-lived dynamic stochastic general equilibrium (DSGE) model comprising bubbly capital with fixed supply, one-period gestation lag, and a cash-in-advance constraint, we show that a money-accommodated but not price-accommodated technological shock can trigger excessive movement in the asset price even in a flexible-price and frictionless environment.

Keywords: Asset price; Technological shock; Monetary policy (search for similar items in EconPapers)
JEL-codes: E22 E42 E44 E51 E52 (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:114:y:2012:i:3:p:292-295

DOI: 10.1016/j.econlet.2011.10.005

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