Rather, there has been a tendency to suggest that the macroprudential approach comes down to “targeting asset prices”, and various well known objections can be raised to this. Which of many asset prices should be targeted? What should be the targeted level? Would interest rates high enough to “burst the asset price bubble” not cause enormous damage elsewhere in the economy?
This narrow focus on asset prices as the core of the problem will have to be replaced by a broader conceptual framework if anything practical is to be done about macroprudential concerns using monetary policy. 4. Can current impediments be removed?