Jurnal Intermediasi

Asset Prices, Reversals, Economic Instability, and Monetary policy
The link between monetary policy and asset price movements has been of perennial interest to policy makers. The 1920s stock market boom and 1929 crash and the 1980s Japanese asset bubble are two salient examples where it is widely believed that monetary authorities geared their actions to the behavior of key asset prices and caused a financial disaster.1 The key questions that arise from these episodes is whether the monetary authorities could have been more successful in reacting to these events or whether it was appropriate for the authorities to pay any heed at all to the movements of asset prices.