Research seminar by Dimitrios Tsomocos (Oxford): “The Optimal Monetary Policy Instrument vs. Asset Price Targeting and Financial Stability”

Tuesday, September 8 ICEF held the research seminar.
Presenter: Dimitrios Tsomocos (Oxford)
Topic: “The Optimal Monetary Policy Instrument vs. Asset Price Targeting and Financial Stability” (joint with C.A.E.Goodhart, C.Osoriu) (pdf)

 
Abstract:This paper assesses the choice of policy instruments for crisis management and prevention and whether Central Banks should target consumer and asset prices to maintain nancial stability. Our results suggest that the interest rate is preferable to the money supply instrument because in times of nancial distress the Central Bank automatically satises the increased demand for money, and that monetary policy aimed at stabilizing consumer in ation, but not asset price in ation, can promote nancial instability. However, we also show that Central Banks' nancial stability objective should be primarily achieved by
regulatory measures.

Venue: Pokrovsky bulvar, 11; Zh-822 

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