Arbeitspapier

Monetary policy and speculative stock markets

Financial market interactions can lead to large and persistent booms and recessions. Instability is an inherent threat to economies with speculative financial markets. A central bank's interest rate setting can amplify the expectation feedback in the financial market and this can lead to unstable dynamics and excess volatility. The paper suggests that policy institutions may be well-advised to handle tools like asset price targeting with care since such instruments might add a structural link between asset prices and macroeconomic aggregates. Neither stock prices nor indices are a good indicator to base decisions on.

Sprache
Englisch

Erschienen in
Series: IMFS Working Paper Series ; No. 119

Klassifikation
Wirtschaft
Financial Markets and the Macroeconomy
Monetary Policy
Computational Techniques; Simulation Modeling
Thema
monetary policy
asset pricing
nonlinearity
heterogeneous expectations
credit constraints

Ereignis
Geistige Schöpfung
(wer)
Boehl, Gregor
Ereignis
Veröffentlichung
(wer)
Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)
(wo)
Frankfurt a. M.
(wann)
2017

Handle
URN
urn:nbn:de:hebis:30:3-475930
Letzte Aktualisierung
10.03.2025, 11:46 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
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Objekttyp

  • Arbeitspapier

Beteiligte

  • Boehl, Gregor
  • Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS)

Entstanden

  • 2017

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