ABSTRACT. Berger et al. study the nexus between globalization and the optimal monetary policy response to asset prices. Watanagase contends that in light of the diminished pressure on prices, the Bank of Thailand responded by shifting to an accommodative monetary policy stance. Reddy says that a factor that complicates the transmission mechanism of monetary policy is the limited size of the Indian financial system. Gnan and Valderrama explain that globalization includes the liberalization of the international flow of capital, and that it may have dampened inflation expectations, in turn reducing actual inflation.