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Should ASEAN-5 monetary policy-makers act preemptively against stock market bubbles?

journal contribution
posted on 2023-05-18, 06:05 authored by Mala RaghavanMala Raghavan, Dungey, M
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 Economics

Volume

47

Issue

11

Pagination

1086-1105

ISSN

0003-6846

Department/School

TSBE

Publisher

Routledge

Place of publication

United Kingdom

Rights statement

Copyright 2014 Taylor & Francis

Repository Status

  • Restricted

Socio-economic Objectives

Monetary policy

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