Imperfect Capital Markets and Nominal Wage Rigidities

Carlstrom, Charles T.; Fuerst, Timothy S.

doi:10.26509/frbc-wp-200205

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Working Paper

Imperfect Capital Markets and Nominal Wage Rigidities

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Should monetary policy respond to asset prices? This paper analyzes a general equilibrium model with imperfect capital markets and rigid nominal wages. Within the context of this model, there is a natural role for the benevolent central bank to dampen the real effects of asset price movements.

06.01.2002WP 02-05DOI 10.26509/frbc-wp-200205

Keywords monetary policy, agency costs

JEL Classification Codes E31, E52

Suggested Citation

Carlstrom, Charles T., and Timothy S. Fuerst. 2002. “Imperfect Capital Markets and Nominal Wage Rigidities.” Federal Reserve Bank of Cleveland, Working Paper No. 02-05. https://doi.org/10.26509/frbc-wp-200205

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