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Asset Bubbles

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Asset Bubbles " Hans-Joachim Voth examines five bubbles that eventually popped, and discuses the feasibility of central bank policy. In all cases, he finds that monetary policy was too loose during the period when the bubble was developing, and that a determined switch from an accommodating to a tight stance caused "the music to stop". Despite the severe real effects of asset bubbles in all five examples, it is argued that the case for targeting them explicitly is weak. "A Tale of Five Bubbles - Asset Price Inflation and Central Bank Policy in Historical Perspective" is published by the Centre for Economic Policy Research.

 

By Centre for Economic Policy Research , Sweden, UK, Germany, Japan, US.

Macro Economic Policy Resource.