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The effects of monetary policy on stock market bubbles: some evidence Galí, Jordi, 1961- Gambetti, Luca Leaning against the wind policies Financial stability Inflation targeting Asset price booms We estimate the response of stock prices to monetary policy shocks using a time-varying coefficients VAR. Our evidence points to protracted episodes in which stock prices end up increasing persistently in response to an exogenous tightening of monetary policy. That response is at odds with the "conventional" view on the effects of monetary policy on bubbles, as well as with the predictions of bubbleless models. We also argue that it is unlikely that such evidence can be accounted for by an endogenous response of the equity premium to the monetary policy shock. (JEL E43, E44, E52, G12, G14) Galí acknowledges the European Research Council for financial support under the European Union’s Seventh Framework Programme (FP7/2007–2013, ERC Grant agreement nº 339656). Gambetti gratefully acknowledges the financial support of the Spanish Ministry of Economy and Competitiveness through grant ECO2012-32392 and the Barcelona GSE Research Network. 2016-03-17T13:34:23Z 2016-03-17T13:34:23Z 2015 info:eu-repo/semantics/article info:eu-repo/semantics/acceptedVersion Gali J, Gambetti L. The effects of monetary policy on stock market bubbles: some evidence. Am Econ J Macroecon. 2015;7(1):233-57 DOI: 10.1257/mac.20140003 1945-7707 http://hdl.handle.net/10230/26005 http://dx.doi.org/10.1257/mac.20140003 eng American Economic Journal: Macroeconomics. 2015;7(1):233-57 info:eu-repo/grantAgreement/EC/FP7/339656 info:eu-repo/grantAgreement/ES/3PN/ECO2012-32392 © American Economic Association. Can be found at http://dx.doi.org/10.1257/mac.20140003 info:eu-repo/semantics/openAccess application/pdf application/pdf American Economic Association