Asset price boom–burst cycle as an elastic money response to technological shocks
AbstractThrough a finite-lived dynamic stochastic general equilibrium (DSGE) model comprising bubbly capital with fixed supply, one-period gestation lag, and a cash-in-advance constraint, we show that a money-accommodated but not price-accommodated technological shock can trigger excessive movement in the asset price even in a flexible-price and frictionless environment.
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Bibliographic InfoArticle provided by Elsevier in its journal Economics Letters.
Volume (Year): 114 (2012)
Issue (Month): 3 ()
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Web page: http://www.elsevier.com/locate/ecolet
Asset price; Technological shock; Monetary policy;
Find related papers by JEL classification:
- E22 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Capital; Investment; Capacity
- E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Charles T. Carlstrom & Timothy S. Fuerst, 2004.
"Asset prices, nominal rigidities, and monetary policy,"
0413, Federal Reserve Bank of Cleveland.
- Charles T. Carlstrom & Timothy Fuerst, 2007. "Asset Prices, Nominal Rigidities, and Monetary Policy," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(2), pages 256-275, April.
- Christiano, Lawrence & Ilut, Cosmin & Motto, Roberto & Rostagno, Massimo, 2008. "Monetary policy and stock market boom-bust cycles," Working Paper Series 0955, European Central Bank.
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