Résumé
This short policy paper looks at the implications of asset price bubbles for the Swiss economy over the two last decades, and attempts at inferring policy recommendations. We argue that such bubbles are generally damaging for the overall economy. Further, concentrating our attention on bubbles that are identified, we ask what kind of policy central banks should adopt in two given situations. We argue that in the case of housing price bubbles, emergency measures specifically directed at the housing market might be superior to conventional monetary policy; and that when faced with an emerging stock market bubble, an autonomous central bank of a small open economy should focus on the aftermath of the bust, taking advantage of its ability to conduct a policy tailored to the domestic needs.
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Extrait
Asset Price Bubbles and Monetary Policy: What Can Be Learned From the Swiss Experience?
1 Introduction
The widespread reduction and stabilisation of inflation in industrialised economies combined with a general rise in volatility on increasingly globalised financial markets have led central bankers and monetary economists to raise new questions about the relationship between asset prices and monetary policy. An issue that has recently received some attention is whether monetary authorities should react to suspected price misalignments on asset markets (bubbles).In this regard, the activist position endorsed, among others, by CECCHETTI, GENBERG, LIPSKY, AND WADHWANI (2000) argues that asset price bubbles should be taken into account in the conduct of policy, in the sense that monetary policy should be somewhat tighter in the presence of an emerging bubble than it would have been in its absence. On the opposite, the conventional approach, defended by BERNANKE AND GERTLER (2000), says that asset prices should influence policy only to the extent that they provide significant informat...Voir le contenu complet de ce document
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