E58.

This paper investigates the identification, the determinacy and the stability of ad hoc, ”quasi-optimal ” and optimal policy rules aug-mented with financial stability indicators (such as asset prices devia-tions from their fundamental values) and minimizing the volatility of the policy interest rates, when the central bank precommits to finan-cial stability. Firstly, ad hoc and quasi-optimal rules parameters of financial stability indicators cannot be identified. For those rules, non zero policy rule parameters of financial stability indicators are obser-vationally equivalent to rule parameters set to zero in another rule, so that they are unable to inform monetary policy. Secondly, under controllability conditions, optimal policy rules parameters of financial stability indicators can all be identified, along with a bounded solu-tion stabilizing an unstable economy as in Woodford (2003), with determinacy of the initial conditions of non- predetermined variables