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Monetary Policy and Stock Market Booms / Lawrence Christiano, Cosmin L. Ilut, Roberto Motto, Massimo Rostagno.
- Format:
- Book
- Author/Creator:
- Christiano, Lawrence.
- Series:
- Working Paper Series (National Bureau of Economic Research) no. w16402.
- NBER working paper series no. w16402
- Language:
- English
- Physical Description:
- 1 online resource: illustrations (black and white);
- Place of Publication:
- Cambridge, Mass. National Bureau of Economic Research 2010.
- Summary:
- Historical data and model simulations support the following conclusion. Inflation is low during stock market booms, so that an interest rate rule that is too narrowly focused on inflation destabilizes asset markets and the broader economy. Adjustments to the interest rate rule can remove this source of welfare-reducing instability. For example, allowing an independent role for credit growth (beyond its role in constructing the inflation forecast) would reduce the volatility of output and asset prices.
- Notes:
- Print version record
- September 2010.
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