Monetary policy-makers should track bubbles – Dallas Fed paper
Economists warn of possible ‘explosive bubbles’ and evaporating wealth
Novel techniques in statistical analysis make bubbles easier to detect in real-time and this analysis should be considered by monetary policy-makers, researchers with the Federal Reserve Bank of Dallas argue.
Though such analysis has typically been the preserve of macro-prudential authorities, Enrique Martínez García, Valerie Grossman and Lauren Spits say bubbles also matter for monetary policy.
In their paper, published on June 1, they expand on a technique for identifying asset price bubbles
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