Monetary Policy and a Stock Market Boom-Bust Cycle. Lawrence Christiano, Roberto Motto and Massimo Rostagno. Inflation has been relatively stable for a while Attention has shifted to other issues: stock market volatility. Stock market has been volatile:
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Lawrence Christiano, Roberto Motto and Massimo Rostagno
during the start-up of boom-bust
episodes in US.
High anticipated investment implies that investment
today reduces future adjustment costs
own and rent out
capital to pay factors
M1 ~ currency + demand deposis
M2/M3 ~ M1 + savings deposits
Credit ~ total borrowing (includes time deposits, but not currency)