In this paper we present a New Keynesian quantitative model that may shed further light on two unsettled issues: whether central banks should include some financial indicator in their policy rules, and which indicator may be expected to generate better stabilization performance. The model has...

In this paper, the authors present a New Keynesian quantitative model with endogenous investment and a stock-market sector to shed further light on two unsettled issues: whether central banks should include some financial indicator in their policy rules, and what indicator may be expected to...

Financial instability is the new challenge for monetary policy. Most studies indicate that the typical patterns of financial crises include prolonged unwinding of investment-saving imbalances (ISI). These phenomena challenge modern monetary policy also because they are not contemplated by its...

In this paper the authors present a New Keynesian quantitative model with endogenous investment and stock-market sector that may shed further light on two unsettled issues: whether central banks should include some financial indicator in their policy rules, and which indicator may be expected to...