Repository logo
  • Log In
    Log in via Symplectic to deposit your publication(s).
Repository logo
  • Communities & Collections
  • Research Outputs
  • Statistics
  • Log In
    Log in via Symplectic to deposit your publication(s).
  1. Home
  2. Imperial Business School
  3. Imperial Business School
  4. Monetary policy and rational asset price bubbles: comment
 
  • Details
Monetary policy and rational asset price bubbles: comment
File(s)
Allen-Barlevy-Gale-Mon-Poilcy-and-Rational-Bubbles-Accepted-May25.pdf (435.04 KB)
Accepted version
Author(s)
Allen, Franklin
Barlevy, Gadi
Gale, Douglas
Type
Journal Article
Abstract
Galí (2014) showed that a monetary policy rule that raises rates when bubbles exceed some steady-state benchmark can paradoxically lead to larger deviations from steady state. Nevertheless, this comment shows that a central bank can always dampen a bubble by setting a higher-than-expected rate, although it may have to raise the rate aggressively. This is a different point from the Miao, Shen, and Wang (2019) comment on Galí (2014). They showed that when the central bank targets a different steady state than Gali considered, raising rates when bubbles exceed this alternative benchmark leads to smaller deviations from steady state.
Date Issued
2025-08-01
Date Acceptance
2025-05-27
Citation
The American Economic Review, 2025, 115 (8), pp.2819-2847
URI
https://hdl.handle.net/10044/1/120383
DOI
https://www.dx.doi.org/10.1257/aer.20230983
ISSN
0002-8282
Publisher
American Economic Association
Start Page
2819
End Page
2847
Journal / Book Title
The American Economic Review
Volume
115
Issue
8
Copyright Statement
Copyright © 2025 American Economic Association. All rights reserved. This is the author’s accepted manuscript made available under a CC-BY licence in accordance with Imperial’s Research Publications Open Access policy (www.imperial.ac.uk/oa-policy)
License URL
https://creativecommons.org/licenses/by/4.0/
Publication Status
Published
About
Spiral Depositing with Spiral Publishing with Spiral Symplectic
Contact us
Open access team Report an issue
Other Services
Scholarly Communications Library Services
logo

Imperial College London

South Kensington Campus

London SW7 2AZ, UK

tel: +44 (0)20 7589 5111

Accessibility Modern slavery statement Cookie Policy

Built with DSpace-CRIS software - Extension maintained and optimized by 4Science

  • Cookie settings
  • Privacy policy
  • End User Agreement
  • Send Feedback