@article{Frait:269631,
      recid = {269631},
      author = {Frait, Jan and Komarek, Lubos},
      title = {Monetary Policy and Asset Prices: What Role for Central  Banks in New EU Member States?},
      address = {2006},
      number = {2068-2018-1513},
      pages = {21},
      year = {2006},
      abstract = {The paper deals with the relationship between monetary  policy and asset prices. Besides surveying the general  discussion, it attempts to extend it to recent developments  in the new Member States of the EU (NMS), namely the Czech  Republic, Hungary, Poland and Slovakia (the EU4). After a  brief description of the current macroeconomic situation in  the NMS, the appropriate reaction of monetary policy to  asset price bubbles is dealt with and the main pros and  cons associated with this reaction are summarised.  Afterwards, the risks of asset market bubbles in the EU4  countries are evaluated. Since the capital markets are  still underdeveloped and the real estate price boom seems  to be a natural reaction to the initial undervaluation, the  risks are viewed as rather small. The conclusion is thus  that it is crucial for central banks in mature economies as  well as in the NMS to conduct their monetary policies as  well as their supervisory and regulatory roles in a way  that does not promote the build-up of asset market bubbles.  In exceptional times, central banks of small open economies  must be ready to use monetary policy steps as a kind of  insurance against the adverse effects of potential asset  market bubbles. },
      url = {http://ageconsearch.umn.edu/record/269631},
      doi = {https://doi.org/10.22004/ag.econ.269631},
}