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The Role Of The Monetary Policy In Asset Prices Volatility Correction: The Romanian Case

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  • Claudiu Tiberiu Albulescu

    („Politehnica” University of Timişoara)

Abstract

The speculative bubbles of asset prices, and especially their burst out, have a negative impact on the financial stability. As a consequence, a close observation of these prices is necessary. If the opportunity of the intervention is intensely analyzed, the debates related to the instruments of the intervention, differentiated depending on the nature of the assets, are almost inexistent. In this study, we intend to analyze the role of monetary policy in asset prices volatility correction, in the context of the development of the financial and real estate markets in Romania. We show that the interest rate instrument has a reduced importance in financial asset prices volatility correction.

Suggested Citation

  • Claudiu Tiberiu Albulescu, 2009. "The Role Of The Monetary Policy In Asset Prices Volatility Correction: The Romanian Case," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 12(12(541)(s), pages 329-336, December.
  • Handle: RePEc:agr:journl:v:12(541)(supplement):y:2009:i:12(541)(supplement):p:329-336
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    4. Carmen M. Reinhart & Vincent Raymond Reinhart, 2002. "What Hurts Emerging Markets Most? G3 Exchange Rate or Interest Rate Volatility?," NBER Chapters,in: Preventing Currency Crises in Emerging Markets, pages 133-170 National Bureau of Economic Research, Inc.
    5. Meese, Richard A & Rogoff, Kenneth, 1988. " Was It Real? The Exchange Rate-Interest Differential Relation over the Modern Floating-Rate Period," Journal of Finance, American Finance Association, vol. 43(4), pages 933-948, September.
    6. Edison, Hali J. & Pauls, B. Dianne, 1993. "A re-assessment of the relationship between real exchange rates and real interest rates: 1974-1990," Journal of Monetary Economics, Elsevier, vol. 31(2), pages 165-187, April.
    7. Isard,Peter, 1995. "Exchange Rate Economics," Cambridge Books, Cambridge University Press, number 9780521460477, December.
    8. Ronald MacDonald, 1997. "What Determines Real Exchange Rates? The Long and Short of it," IMF Working Papers 97/21, International Monetary Fund.
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