Reflect the asset price channel of monetary policy

Reference no: EM131223423

Consider a situation where central bank officials repeatedly express concern that output exceeds potential output, implying that the economy is overheating.

Although they haven't implemented any policy moves as yet, the data show that consumption of luxury goods has begun to slow.

Explain how this behavior could reflect the asset-price channel of monetary policy at work.

Reference no: EM131223423

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