Monetary policy and bubbles in a new Keynesian model with overlapping generations

Jordi Galí

Economics Working Papers from Department of Economics and Business, Universitat Pompeu Fabra

Abstract: I analyze an extension of the New Keynesian model that features overlapping generations of Önitely-lived agents. In contrast with the standard model, the proposed framework allows for the existence of rational expectations equilibria with asset price bubbles. I examine the conditions under which bubbly equilibria may emerge and some of the implications for monetary policy. Monetary policies that lean against the bubble are shown to be potentially destabilizing, and likely to be dominated by ináation targeting policies

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)
Date: 2016-12, Revised 2020-01
New Economics Papers: this item is included in nep-dge and nep-mac
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Citations: View citations in EconPapers (5)

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Related works:
Journal Article: Monetary Policy and Bubbles in a New Keynesian Model with Overlapping Generations (2021)
Working Paper: Monetary Policy and Bubbles in New Keynesian Model with Overlapping Generations (2020)
Working Paper: Monetary Policy and Bubbles in a New Keynesian Model with Overlapping Generations (2020)
Working Paper: Monetary Policy and Bubbles in a New Keynesian Model with Overlapping Generations (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:upf:upfgen:1561

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