Paper #1561

Título:

Monetary policy and bubbles in a new Keynesian model with overlapping generations

Autor:

Jordi Galí

Fecha:

Diciembre 2016 (Revisado: Enero 2020)

Resumen:

I analyze an extension of the New Keynesian model that features overlapping generations of Önitely-lived agents. In contrast with the standard model, the proposed framework allows for the existence of rational expectations equilibria with asset price bubbles. I examine the conditions under which bubbly equilibria may emerge and some of the implications for monetary policy. Monetary policies that lean against the bubble are shown to be potentially destabilizing, and likely to be dominated by ináation targeting policies

Palabras clave:

Monetary policy rules, stabilization policies, asset price volatility

Códigos JEL:

E44, E52

Área de investigación:

Macroeconomía y Economía Internacional

Publicado en:

American Economic Journal: Macroeconomics, 13(2), 2021, 121-167

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