Monetary Policy in a World Without Perfect Capital Markets
نویسندگان
چکیده
Working papers of the Federal Reserve Bank of Cleveland are preliminary materials circulated to stimulate discussion and critical comment on research in progress. They may not have been subject to the formal editorial review accorded official Federal Reserve Bank of Cleveland publications. The views stated herein are those of the authors and are not necessarily those of the Federal Reserve Bank of Cleveland or of the Board of Governors of the Federal Reserve System. This paper examines a theoretical model in which an entrepreneur's net worth has an effect on his ability to finance current activity. Net worth, in turn, is determined by asset prices which can be affected by monetary policy. In this environment there is a welfare-improving role for the central bank to respond to asset price and technology shocks.
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