Remarks

Kohn, Donald L.; Meyer, Laurence H.; Dudley, William

doi:10.7208/chicago/9780226092126.003.0011

Cited by 5 publications

(8 citation statements)

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“…Next, we turn to the characterization of the Fed view on the basis of Kohn (). First, the Fed view emphasizes a significant cost when a monetary policy maker mistakenly tightens a policy stance although the economy is not in a boom–bust cycle.…”

Section: Towards a Synthesis Of The Bis View And The Fed Viewmentioning

confidence: 99%

“…Former European Central Bank (ECB) President Trichet () and former ECB Executive Board Members Bini Smaghi () and Stark () stressed that monetary policy conduct relying on the clean‐up‐the‐mess strategy has clear limitations. Even among Fed officials, former FRB Vice Chairman Kohn (), Chicago Fed President Evans (), former San Francisco Fed President (and current FRB Chair) Yellen () and New York Fed President Dudley () have stated that the potential gain from preventing asset price boom–bust cycles may turn out to be far greater than it was once thought to be.…”

Section: Introductionmentioning

confidence: 99%

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Monetary Policy and Asset Price Booms: A Step Towards a Synthesis

Fujiki

Kaihatsu

Kurebayashi

et al. 2016

International Finance

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Should a monetary policy maker following a Taylor-type rule set a higher policy rate than the level suggested by the rule because of a possibility of an asset price bust in the near future? Our answer to this question for monetary policy makers who have two scenarios of 'boom-bust cycle' and 'stable growth' is yes if the following two conditions are satisfied. First, early warning indicators based on credit and residential investment data show a high probability of a boom-bust cycle occurring. Second, the policy rate path that minimizes the boom-bust probability-based expected value of a social loss associated with inflation and the output gap over the two scenarios is higher than the rate path by the Taylor-type rule. Our counterfactual analysis shows that the Fed should have raised the federal funds rate by a small amount over and above the level suggested by a Taylor-type rule in the early 2000s.

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Section: Towards a Synthesis Of The Bis View And The Fed Viewmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Monetary Policy and Asset Price Booms: A Step Towards a Synthesis

Fujiki

Kaihatsu

Kurebayashi

et al. 2016

International Finance

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“…Dès lors, le consensus suivant lequel seuls les variations des prix d'actifs et les déséquilibres financiers modifiant les anticipations d'inflation doivent être considérés par les banquiers centraux est remis en question (Kohn, 2009;Walsh, 2009;Betbèze et al, 2011). La stabilité de l'inflation est propice à l'instabilité financière (Aglietta, 2011), en raison notamment de la difficulté de concilier une politique de taux (liée à la stabilisation des prix et à l'activité économique) et une politique bancaire de stabilité financière (fortement conditionnée par les effets de richesse).…”

Section: Revue De La Littératureunclassified

Politique monétaire, choix de portefeuille du secteur bancaire et canal de la prise de risque

Gilles

Huchet

Gauvin

2013

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La responsabilité des banques centrales dans le déclenchement des crises est mise en cause lorsque des taux d’intérêt directeurs durablement bas favorisent des prises de risques excessives, notamment de la part des banques. Ces dernières réalisent également des choix en liaison avec la distorsion induite par l’existence de ratios de capital réglementaires, suivant le canal dit du capital bancaire. Dans ce contexte, un modèle simple centré sur le secteur bancaire permet de montrer comment le pilotage macroéconomique par les taux d’intérêt peut favoriser des arbitrages défavorables à l’activité traditionnelle de crédit et producteurs d’instabilité financière. La possibilité de titriser les créances peut renforcer la solvabilité bancaire, mais produit à son tour de nouveaux risques en liaison avec la création de monnaie par le secteur bancaire fantôme. Des résultats s’en dégagent en termes de politiques monétaire et prudentielle.The question of central banks’ partial liability for emerging crisis is raised when sustainable low interest rates lead to excessive risk exposures, especially if faced by banks. Portfolio choices also depend on the bank capital channel and may induce regulatory capital arbitrages. In this context, a simple model shows that monetary policy can induce both a fall in credit activity and an increase in financial instability. Moreover, securitization can enhance bank solvency, but also systemic risks through the shadow banking system. Conclusions can be drawn in terms of monetary and prudential policies

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“…Christiano et al [2008] basically argue that bubbles arise from misperceived technology shocks and thus asset prices should not be targeted by monetary policy. Kohn [2009] argues that monetary policy has little ability to influence the speculative component of asset prices and ''leaning against the wind'' will likely result in suboptimal economic performance in the medium term.…”

Section: Introduction Introduction Introduction Introductionmentioning

confidence: 99%

“…5 Although the results vary to some degree between sample countries and periods, one might conclude from the literature that stock markets remain broadly unaffected by monetary policy measures while real estate markets tend to react to central banks' instruments. However, in as far as real estate mar-4 Assenmacher-Wesche and Gerlach [2009], Bean [2004] and Kohn [2009] discuss various prerequisites for a successful ''leaning against the wind''-strategy of monetary policy. 5 We review this literature in more detail in the section 2.…”

Section: Introduction Introduction Introduction Introductionmentioning

confidence: 99%

Monetary policy and real estate prices: a disaggregated analysis for Switzerland

Berlemann

Freese

2012

Int Econ Econ Policy

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Most empirical studies found that monetary policy has a significant effect on house prices while stock markets remain unaffected by interest rate shocks. In this paper we conduct a more detailed analysis by studying various sub-segments of the real estate market. Employing a new dataset for Switzerland we estimate vector autoregressive models and find substitution effects between house and apartment prices on the one hand and rental prices on the other. Interestingly enough, commercial property prices do not react on interest rate variations. Terms of use: Documents in

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Remarks

Cited by 5 publications

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Monetary Policy and Asset Price Booms: A Step Towards a Synthesis

Monetary Policy and Asset Price Booms: A Step Towards a Synthesis

Politique monétaire, choix de portefeuille du secteur bancaire et canal de la prise de risque

Monetary policy and real estate prices: a disaggregated analysis for Switzerland

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