WP Global Economy 2017.02.02
Working Paper(17-001E) "Asset Prices, Nominal Rigidities, and Monetary Policy: Case of Housing Price"
This is working paper.
Carlstrom and Fuerst (2007) ["Asset Prices, Nominal Rigidities, and Monetary Policy," Review of Economic Dynamics 10, 256-275] find that monetary policy response to share prices is a source of equilibrium indeterminacy in a sticky-price economy. We find that if housing price is a target of a central bank, monetary policy response to asset price is helpful for equilibrium determinacy.
Asset Prices, Nominal Rigidities, and Monetary Policy: Case of Housing Price （PDF：268KB）