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See No Evil, Hear No Evil, Speak No Evil: The Policy Response to an Asset Market Bubble--The Fed Under Ben Bernanke
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Reference: HBS-7631BC-E
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Number of pages: 16
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Publication Date: Aug 12, 2008
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Source: HBSP (USA)
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Type of Document: Book Chapter
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Industry Setting: Banking
Description
One of the most controversial questions in central banking is how policy makers should factor asset markets into their decision making. The toughest policy challenge comes in the extreme environment of a suspected asset price bubble or bust. Should a central bank step in to try to stop an unsustainable surge in asset prices? And, should the bubble burst, how long should a central bank wait before cutting interest rates? This chapter examines Ben Bernanke's approach. This chapter is excerpted from "Ben Bernanke's Fed: The Federal Reserve After Greenspan."