That adds to the struggle monetary policy faces in coping with asset-price booms and busts.
Their immediate dilemma is how to sustain recovery without inflating credit and asset-price bubbles.
Option-writing, an activity that insures the purchaser against asset-price movements, creates a particular danger.
Then, excess demand resulted in higher inflation, huge current-account deficits and rampant asset-price inflation.
Look only at Japan for a painful reminder of the implications of a burst asset-price bubble.
Mr Greenspan has long held that interest rates are not a good tool for bursting asset-price bubbles.
Asset-price inflation is just as harmful for economies as inflation in the prices of goods and services.
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Whether central banks should respond to asset-price bubbles is one of the hottest debates in monetary policy.
"Until you get the next batch of buildings, you will have uninterrupted rent and asset-price escalation, " says Periquet.
Many central bankers consider it unrealistic to make prevention of asset-price bubbles a specific objective of systemic oversight.
Asset-price booms sow the seeds of their own destruction: They end in slumps.
Asset-price rises are also a problem for emerging economies with flexible exchange rates.
In recent years, though, there has been disappointingly little research on how monetary policy should respond to asset-price inflation.
ECONOMIST: Should central banks try to target asset-price inflation?
The recession was caused not, as before, by inflation taking off, but by the bursting of an asset-price bubble.
Tentatively, I suggest a ten-year moving average to reflect a full asset-price cycle.
Several other countries have expressed concern that the Fed's decision could further strengthen their currencies and lead to asset-price inflation.
Banking crises, usually associated with asset-price bubbles (because that is where the risky lending goes), nearly always follow this pattern.
The Fed's preference has been to deal with the after-effects of asset-price bubbles rather than to try to prevent their formation.
Foaming asset prices are reviving the debate about whether the Federal Reserve should raise interest rates to cool down asset-price inflation.
Perhaps the main risk now facing emerging Asia is not feeble demand in the West but inflation or asset-price bubbles at home.
However, the report argues that central bankers should respond to asset-price movements for other reasons than merely their direct impact on inflation.
The authors use three different macroeconomic models to simulate the effect of central banks' responding to asset-price movements as well as inflation.
Seven decades ago, asset-price inflation was also associated with rapid credit expansion.
ECONOMIST: Should central banks try to target asset-price inflation?
The Bank of Japan allowed deflation to develop when it held policy too tight, partly because it was worried about another asset-price bubble.
ECONOMIST: It is time for the Fed to start raising interest rates
For Mr Lindsey has made no secret of the fact that he considers the American economy to be suffering from an asset-price bubble.
But you go on to suggest that central bankers are powerless to stop the development of asset-price bubbles short of a blunt interest-rate increase.
The answer is that asset-price inflation can be harmful to economic health in the same way as inflation in the prices of goods and services.
ECONOMIST: Should central banks try to target asset-price inflation?
IR You correctly recognise one of the key causes of asset-price inflation during the past three years excessive leverage by noting that margin debt has doubled since 1996.
Asset-price inflation can harm the economy as much as consumer-price inflation.
But low interest rates, in turn, risk further fuelling asset-price inflation.
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