Monetary Policy and Bubbles in a New Keynesian Model with Overlapping Generations
No 959, Working Papers from Barcelona Graduate School of Economics
I develop an extension of the basic New Keynesian model with overlapping generations of finitely-lived agents. In contrast with the standard model, the proposed framework allows for the existence of rational expectations equilibria featuring asset price bubbles. I examine the conditions under which bubbly equilibria may emerge and the implications for the design of monetary policy.
Keywords: monetary policy rules; stabilization policies; asset price volatility (search for similar items in EconPapers)
JEL-codes: E44 E52 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:bge:wpaper:959
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