EconPapers    
Economics at your fingertips  
 

What Asset Prices Should be Targeted by a Central Bank?

Kengo Nutahara

No 13-004E, CIGS Working Paper Series from The Canon Institute for Global Studies

Abstract: This paper investigates the monetary policy design for restoring equilibrium determinacy. Our interests are whether a central bank should respond to asset price fluctuations, and if so, what asset prices should be targeted. We show that a monetary policy response to the price of a productive tangible asset (capital price) is helpful for equilibrium determinacy, while that to the price of an intangible asset that reflects a firms profit (share prices) is a source of equilibrium indeterminacy. This result comes from the two assets prices moving in opposite directions in response to a permanent increase in inflation.

New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
Date: 2013-08
References: View references in EconPapers View complete reference list from CitEc
Citations View citations in EconPapers (1) Track citations by RSS feed

Downloads: (external link)
http://www.canon-igs.org/research_papers/130801_nutahara_2e.pdf (application/pdf)

Related works:
Journal Article: What Asset Prices Should Be Targeted by a Central Bank? (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:cnn:wpaper:13-004e

Access Statistics for this paper

More papers in CIGS Working Paper Series from The Canon Institute for Global Studies Contact information at EDIRC.
Bibliographic data for series maintained by The Canon Institute for Global Studies ().

 
Page updated 2018-12-02
Handle: RePEc:cnn:wpaper:13-004e