Author(s)

Kengo Nutahara^1,2

¹Department of Economics, Senshu University, Kanagawa, Japan.
²The Canon Institute for Global Studies, Tokyo, Japan.

Carlstrom and Fuerst [“Asset Prices, Nominal Rigidities, and Monetary Policy,” Review of Economic Dynamics, Vol. 10, 2007, pp. 256-275] find that a positive monetary policy response to share prices is a source of equilibrium indeterminacy. In this note, we investigate the negative response of a central bank to share prices. We find that a negative monetary policy response to share prices is also a source of equilibrium indeterminacy.

Asset Prices, Monetary Policy, Equilibrium Determinacy

Nutahara, K. (2014) Asset Prices, Nominal Rigidities, and Monetary Policy: Negative Monetary Policy Responses to Asset Price Fluctuations. Theoretical Economics Letters, 4, 634-638. doi: 10.4236/tel.2014.48080.