NSE Seminar

Asset Bubbles and Monetary Policy

Time：10:30 am-12:00 pm, Mar 21 2018

Venue：Small Classroom of Wanzhong Building , National School of Development, Peking University

Speaker：Jianjun Miao (Professor of Economics at Boston University)

 
【Abstract】

We provide an infinite-horizon model of rational asset bubbles in a Dynamic New Keynesian framework. Entrepreneurs are heterogeneous in investment efficiency and face credit constraints. They can trade land as an asset, which also serves collateral to borrow from banks with reserve requirements. Land commands a liquidity premium and a land bubble canemerge. Monetary policy can affect the condition for the existence of a bubble, its steady-state size, and its dynamics including the initial size. The 'leaning against the wind' interest rate policy will reduce the bubble volatility, but it may come at the cost of raising the inflation volatility. Whether monetary policy should respond to asset bubbles depends on the particular interest rate rule adopted by the central bank and on the exogenous shocks hitting the economy.

【Speaker】

Jianjun Miao is Professor of Economics at Boston University, and an Associate Editor of Annals of Economics and Finance, Economic Theory, Journal of Mathematical Economics, and Macroeconomic Dynamics. He received his BS in Mathematics from the University of Science and Technology of China in 1992 and his PhD in Economics from the University of Rochester in 2003.

Professor Miao’s research fields are macroeconomics and finance and their interface with decision theory, public finance, and industrial organization. His main research areas are the macroeconomic implications of bubbles and crashes, theory and applications of decision making under uncertainty, macroeconomics with financial and real frictions, dynamic contracts, and continuous-time finance. He publishes extensively in top economics and finance journals including American Economic Review, Econometrica, Journal of Finance, American Economic Journal: Macroeconomics, International Economic Review, Journal of Economic Theory, Journal of Financial Economics, Journal of Monetary Economics, Review of Financial Studies, and Theoretical Economics.

Over the course of his career, Professor Miao has taught money and banking, corporate finance, Chinese economy, economic dynamics, macroeconomics, financial economics, and monetary economics to BA, MA and PhD students.