In the industrialized and developing world, a distinctive feature of the last two decades has been prolonged buildups and sharp collapses in asset markets such as stock, housing, and exchange markets. The volatility has sparked intense debate in academic and policy circles over the appropriate monetary and regulatory response to dramatic market shifts. This book examines asset price bubbles to further our understanding of the causes and implications of financial instability, focusing on the potential of central banks and regulatory agencies to prevent it. The book grew out of a conference jointly sponsored by the Federal Reserve Bank of Chicago and the World Bank Group in April 2002. Among the contributors are: Franklin Allen, Michael Bordo, Claudio Borio, Michael Bryan, Gerald Caprio, Jr., Jeffrey Carmichael, Stephen Cecchetti, John Cochrane, Charles Collyns, Werner De Bondt, Neil Esho, Hans Genberg, Marvin Goodfriend, Charles Goodhart, Philipp Hartmann, Patrick Honohan, Steven Kaplan, Randall S. Kroszner, Philip Lowe, Catherine Mann, Ellen McGrattan, Ellen E. Meade, Allan H. Meltzer, Frederic Mishkin, Antu Panini Murshid, Kunio Okina, Guillermo Perry, Michael Pomerleano, Edward C. Prescott, Jeremy Siegel, Robert J. Shiller, Jean-Claude Trichet, and Eugene N. White.