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Should ASEAN-5 monetary policy-makers act preemptively against stock market bubbles?
Stock market rises and asset price inflation in ASEAN economies have raised the question of whether monetary authorities in these economies should act pre-emptively against these rising trends to prevent impending financial crises. Using structural vector error correction models (SVECMs) which incorporate mixed data characteristics, we examine the effects and interactions between monetary policy and stock market shocks for Singapore, Malaysia, Thailand, Indonesia and the Philippines. The results suggest that monetary policy focused on the stock market detracts from price stability objectives, in particular because containing a stock market bubble may inadvertently depress output and inflation.
History
Publication title
Applied EconomicsVolume
47Issue
11Pagination
1086-1105ISSN
0003-6846Department/School
TSBEPublisher
RoutledgePlace of publication
United KingdomRights statement
Copyright 2014 Taylor & FrancisRepository Status
- Restricted