Equity prices unaffected by monetary policy, leading to persistent asset value deviations.
The article explores how changes in stock prices can affect the availability of money for transactions. The researchers found that optimal monetary policies can help stabilize the economy, even if stock prices fluctuate. They also discovered that when interest rates are kept constant, the value of financial assets can be influenced by how easy it is to trade them. This means that if monetary policies are not well-suited to the economy, asset prices can deviate from their true worth.