Asset bubbles and inflation as competing monetary phenomena

• 成果类型: Article
• 署名作者: Plantin, Guillaume
• 署名单位: Institut d'Etudes Politiques Paris (Sciences Po)
• 刊物名称: JOURNAL OF ECONOMIC THEORY
• ISSN/ISSBN: 0022-0531
• DOI: 10.1016/j.jet.2023.105711
• 发表日期: 2023
• 关键词: financial frictions; bubbles; nominal rigidities; Taylor rule

摘要

In an economy in which adjusting prices comes at a fixed menu cost, a baseline Taylor rule generates multiple equilibria with varying price rigidity, inflation, and real interest rate. Asset bubbles may be sustained as long as prices are rigid, they burst as inflation picks up and the real rate reverts to a long-term value at which bubbles are no longer sustainable. Unlike natural bubbles, these policy-induced bubbles once issued always crowd out investment by draining resources from the most financially constrained agents. & COPY; 2023 Elsevier Inc. All rights reserved.