But this boost would ultimately be very costly. Not only does it does it come with welfaredecreasing macroeconomic instability, but it also brings about an arbitrary redistribution of wealth that may, in the worst case, undermine social cohesion and trust that the central bank is acting within its narrow price stability mandate.
And moreover, it can create financial stability risks elsewhere, generating negative spillovers from what should otherwise be a normal international adjustment process. Against this background, it would be wrong to treat bubbles as a welcome replacement therapy to a sustainable growth model.