Monetary Policy and Asset Prices: To Respond or Not?

Arbeitspapier

We investigate whether there is a case for asset prices in interest rates rules within a small econometric model of the Norwegian economy, modeling the interdependence of the real economy, credit and three classes of assets prices: housing prices, equity prices and the nominal exchange rate. We compare the performance of simple and efficient interest rate rules that allow for response to movements in asset prices to the performance of more standard monetary policy rules. We find that including housing prices and equity prices in the policy rules can improve macroeconomic performance in terms of both nominal and real economic stability. In contrast, a response to nominal exchange rate fluctuations can induce excess volatility in general and prove detrimental to macroeconomic stability.

Angaben zum Objekt

• Sprache: Englisch
• ISBN: 82-7553-317-1

Verweise und Beziehungen

• Erschienen in: Series: Working Paper ; No. 2005/9

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Model Construction and Estimation ; Model Evaluation, Validation, and Selection ; Forecasting Models; Simulation Methods ; Money and Interest Rates: Forecasting and Simulation: Models and Applications ; Monetary Policy
• Thema: monetary policy ; asset prices ; simple interest rate rules ; econometric model

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Akram, Q. Farooq ; Bårdsen, Gunnar ; Eitrheim, Øyvind
• Ereignis: Veröffentlichung
• (wer): Norges Bank
• (wo): Oslo
• (wann): 2005

Weitere Informationen

• Handle: http://hdl.handle.net/10419/209856
• Letzte Aktualisierung: 20.09.2024, 08:21 MESZ