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Bean on asset prices and monetary policy

In the speech 'Asset Prices, Monetary Policy and Financial Stability: A Central Banker's View' given on 3 January Charles Bean of the Bank of England reviews the argument that monetary policy should react to asset price movements and/or financial imbalances over and above their impact on the inflation outlook. In a simple New Keynesian model, modified to allow for capital and debt accumulation, Bean then explores some of the ways in which the possibility of a credit crunch in the aftermath of an

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