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dc.contributor.authorLuik, Marc-Andre
dc.contributor.authorWesselbaum, Dennis
dc.date.available2016-02-02T21:08:11Z
dc.date.copyright2016-01
dc.identifier.citationLuik, M.-A., & Wesselbaum, D. (2016). Did the FED React to Asset Price Bubbles? (Economics Discussion Papers Series No. 1602). University of Otago. Retrieved from http://hdl.handle.net/10523/6199en
dc.identifier.issn1178-2293
dc.identifier.urihttp://hdl.handle.net/10523/6199
dc.description.abstractThis paper investigates whether the U. S. Federal Reserve responds to asset price bubbles or not. We estimate a DSGE model featuring a financial accelerator and a process for asset price bubbles. We find evidence for a fairly strong reaction to bubbles. However, a counterfactual analysis shows that output is lower if the central banks reacts to the asset price bubble. Finally, we estimate an asymmetric version in which the central bank only reacts to positive price deviations. This version generates the best statistical fit. Including the bubble reduces the negative effects of the recent financial crisis but the symmetric response would have generated an earlier and stronger recovery.en_NZ
dc.format.mimetypeapplication/pdf
dc.language.isoenen_NZ
dc.publisherUniversity of Otagoen_NZ
dc.relation.ispartofseriesEconomics Discussion Papers Seriesen_NZ
dc.rightsAttribution-NonCommercial-ShareAlike 4.0 International*
dc.rights.urihttp://creativecommons.org/licenses/by-nc-sa/4.0/*
dc.subjectBayesian Methodsen_NZ
dc.subjectBubblesen_NZ
dc.subjectMonetary Policy.en_NZ
dc.titleDid the FED React to Asset Price Bubbles?en_NZ
dc.typeDiscussion Paperen_NZ
dc.date.updated2016-02-02T21:00:52Z
otago.schoolOtago Business School / Department of Economicsen_NZ
otago.openaccessOpenen_NZ
otago.relation.number1602en_NZ
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Attribution-NonCommercial-ShareAlike 4.0 International
Except where otherwise noted, this item's licence is described as Attribution-NonCommercial-ShareAlike 4.0 International