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International Finance: Why Central Banks Should Burst Bubbles

Author: Nouriel Roubini
Spring 2006

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Nouriel Roubini argues that monetary policy must react to asset prices and asset bubbles. Because bubbles that grow excessively large can have severe financial consequences when they finally burst, optimal monetary policy must deal with them preemptively.

This is half of a two-part debate. To read the accompanying essay by Adam Posen, click here.

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