STORRE
STORRE: Stirling Online Research Repository
http://hdl.handle.net/1893/9205| Appears in Collections: | Economics Journal Articles |
| Peer Review Status: | Refereed |
| Title: | Optimal monetary policy and asset price misalignments |
| Author(s): | Kontonikas, Alexandros Montagnoli, Alberto |
| Contact Email: | alberto.montagnoli@stir.ac.uk |
| Keywords: | Monetary policy Asset prices |
| Issue Date: | Nov-2006 |
| Date Deposited: | 24-Sep-2012 |
| Citation: | Kontonikas A & Montagnoli A (2006) Optimal monetary policy and asset price misalignments. Scottish Journal of Political Economy, 53 (5), pp. 636-654. https://doi.org/10.1111/j.1467-9485.2006.00398.x |
| Abstract: | This paper analyses the relationship between monetary policy and asset prices in the context of optimal policy rules. The transmission mechanism is represented by a linearized rational expectations model augmented for the effect of asset prices on aggregate demand. Stabilization objectives are represented by a discounted quadratic loss function penalizing inflation and output gap volatility. Asset prices are allowed to deviate from their intrinsic value due to momentum trading. We find that in the presence of wealth effects and inefficient markets, asset price misalignments from their fundamentals should be included in the optimal interest rate reaction function. |
| DOI Link: | 10.1111/j.1467-9485.2006.00398.x |
| Rights: | The publisher does not allow this work to be made publicly available in this Repository. Please use the Request a Copy feature at the foot of the Repository record to request a copy directly from the author. You can only request a copy if you wish to use this work for your own research or private study. |
| Licence URL(s): | http://www.rioxx.net/licenses/under-embargo-all-rights-reserved |
| File | Description | Size | Format | |
|---|---|---|---|---|
| OPTIMAL MONETARY POLICY AND ASSET PRICE MISALIGNMENTS.pdf | Fulltext - Published Version | 171.87 kB | Adobe PDF | Under Permanent Embargo Request a copy |
Note: If any of the files in this item are currently embargoed, you can request a copy directly from the author by clicking the padlock icon above. However, this facility is dependent on the depositor still being contactable at their original email address.
This item is protected by original copyright |
Items in the Repository are protected by copyright, with all rights reserved, unless otherwise indicated.
The metadata of the records in the Repository are available under the CC0 public domain dedication: No Rights Reserved https://creativecommons.org/publicdomain/zero/1.0/
If you believe that any material held in STORRE infringes copyright, please contact library@stir.ac.uk providing details and we will remove the Work from public display in STORRE and investigate your claim.