Asset prices and monetary policy in a sticky-price economy with financial frictions
AbstractA recent study shows that equilibrium indeterminacy arises if monetary policy responds to asset prices, especially share prices, in a sticky-price economy. We show that equilibrium indeterminacy never arises if the working capital of firms is subject to their asset values by financial frictions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 24113.
Date of creation: 05 Apr 2010
Date of revision:
asset prices; financial frictions; equilibrium indeterminacy; monetary policy; sticky prices;
Other versions of this item:
- NUTAHARA Kengo, 2010. "Asset Prices and Monetary Policy in a Sticky-Price Economy with Financial Frictions," Discussion papers 10060, Research Institute of Economy, Trade and Industry (RIETI).
- E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
- C62 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Existence and Stability Conditions of Equilibrium
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-08-06 (All new papers)
- NEP-CBA-2010-08-06 (Central Banking)
- NEP-MAC-2010-08-06 (Macroeconomics)
- NEP-MON-2010-08-06 (Monetary Economics)
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.:
- Sharon Harrison & Mark Weder, 2010.
"Sunspots and Credit Frictions,"
CDMA Working Paper Series
201001, Centre for Dynamic Macroeconomic Analysis.
- Timothy S. Fuerst & Charles T. Carlstrom, 1998. "Agency costs and business cycles," Economic Theory, Springer, vol. 12(3), pages 583-597.
- Faia, Ester & Monacelli, Tommaso, 2007.
"Optimal interest rate rules, asset prices, and credit frictions,"
Journal of Economic Dynamics and Control,
Elsevier, vol. 31(10), pages 3228-3254, October.
- Tommaso Monacelli & Ester Faia, 2005. "Optimal Interest Rate Rules, Asset Prices and Credit Frictions," Computing in Economics and Finance 2005 452, Society for Computational Economics.
- repec:ebl:ecbull:v:5:y:2007:i:18:p:1-9 is not listed on IDEAS
- Ben S. Bernanke & Mark Gertler, 2001. "Should Central Banks Respond to Movements in Asset Prices?," American Economic Review, American Economic Association, vol. 91(2), pages 253-257, May.
- Zheng Liu & Pengfei Wang & Tao Zha, 2009.
"Do Credit Constraints Amplify Macroeconomic Fluctuations?,"
0910, Department of Economics, Emory University (Atlanta).
- Zheng Liu & Pengfei Wang & Tao Zha, 2009. "Do credit constraints amplify macroeconomic fluctuations?," Working Paper Series 2009-28, Federal Reserve Bank of San Francisco.
- Zheng Liu & Pengfei Wang & Tao Zha, 2010. "Do credit constraints amplify macroeconomic fluctuations?," Working Paper 2010-01, Federal Reserve Bank of Atlanta.
- 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.
- Kobayashi, Keiichiro & Nakajima, Tomoyuki & Inaba, Masaru, 2012.
"Collateral Constraint And News-Driven Cycles,"
Cambridge University Press, vol. 16(05), pages 752-776, November.
- KOBAYASHI Keiichiro & NAKAJIMA Tomoyuki & INABA Masaru, 2007. "Collateral Constraint and News-driven Cycles," Discussion papers 07013, Research Institute of Economy, Trade and Industry (RIETI).
- Tomoyuki Nakajima & Masaru Inaba & Keiichiro Kobayashi, 2007. "Collateral constraint and news-driven cycles," 2007 Meeting Papers 320, Society for Economic Dynamics.
- Ben Bernanke & Mark Gertler & Simon Gilchrist, 1998.
"The Financial Accelerator in a Quantitative Business Cycle Framework,"
NBER Working Papers
6455, National Bureau of Economic Research, Inc.
- Bernanke, Ben S. & Gertler, Mark & Gilchrist, Simon, 1999. "The financial accelerator in a quantitative business cycle framework," Handbook of Macroeconomics, in: J. B. Taylor & M. Woodford (ed.), Handbook of Macroeconomics, edition 1, volume 1, chapter 21, pages 1341-1393 Elsevier.
- Bernanke, B. & Gertler, M. & Gilchrist, S., 1998. "The Financial Accelerator in a Quantitative Business Cycle Framework," Working Papers 98-03, C.V. Starr Center for Applied Economics, New York University.
- Matteo Iacoviello, 2002.
"House prices, borrowing constraints and monetary policy in the business cycle,"
Boston College Working Papers in Economics
542, Boston College Department of Economics, revised 06 Dec 2004.
- Matteo Iacoviello, 2005. "House Prices, Borrowing Constraints, and Monetary Policy in the Business Cycle," American Economic Review, American Economic Association, vol. 95(3), pages 739-764, June.
- Keiichiro Kobayashi & Kengo Nutahara, 2007.
"Collateralized capital and news-driven cycles,"
AccessEcon, vol. 5(18), pages 1-9.
- Charles T. Carlstrom & Timothy S. Fuerst, 1996.
"Agency costs, net worth, and business fluctuations: a computable general equilibrium analysis,"
9602, Federal Reserve Bank of Cleveland.
- Carlstrom, Charles T & Fuerst, Timothy S, 1997. "Agency Costs, Net Worth, and Business Fluctuations: A Computable General Equilibrium Analysis," American Economic Review, American Economic Association, vol. 87(5), pages 893-910, December.
- Gilchrist, Simon & Leahy, John V., 2002. "Monetary policy and asset prices," Journal of Monetary Economics, Elsevier, vol. 49(1), pages 75-97, January.
- Lise Clain-Chamosset-Yvrard & Thomas Seegmuller, 2012.
"Rational Bubbles and Macroeconomic Fluctuations. The(De-)Stabilizing Role of Monetary Policy,"
AMSE Working Papers
1207, Aix-Marseille School of Economics, Marseille, France, revised 23 Mar 2012.
- Lise Clain-Chamosset-Yvrard & Thomas Seegmuller, 2013. "Rational Bubbles and Macroeconomic Fluctuations: The (De-)Stabilizing Role of Monetary Policy," Working Papers halshs-00793063, HAL.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.