Asset price boom–burst cycle as an elastic money response to technological shocks

Through a finite-lived dynamic stochastic general equilibrium (DSGE) model comprising bubbly capital with fixed supply, one-period gestation lag, and a cash-in-advance constraint, we show that a money-accommodated but not price-accommodated technological shock can trigger excessive movement in the asset price even in a flexible-price and frictionless environment.

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Year of publication:	2012
Authors:	Wong, Chin-Yoong ; Eng, Yoke-Kee
Published in:	Economics Letters. - Elsevier, ISSN 0165-1765. - Vol. 114.2012, 3, p. 292-295
Publisher:	Elsevier
Subject:	Asset price \| Technological shock \| Monetary policy

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Type of publication:	Article
Classification:	E22 - Capital; Investment (including Inventories); Capacity ; E42 - Monetary Systems; Standards; Regimes; Government and the Monetary System ; E44 - Financial Markets and the Macroeconomy ; E51 - Money Supply; Credit; Money Multipliers ; E52 - Monetary Policy (Targets, Instruments, and Effects)
Source:	RePEc - Research Papers in Economics

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