Advanced Search
MyIDEAS: Login to save this article or follow this journal

Asset price bubbles and counter-cyclical monetary policy: Why central banks have been wrong and what should be done

Contents:

Author Info

  • Thomas I. Palley

    ()
    (New America Foundation, Washington DC)

Abstract

Central banks have generally opposed targeting asset and credit market excess. This paper argues against that position. Bubbles can impose significant harm through the debt footprint effects they leave behind, and through distortions resulting from using interest rates to mitigate their aggregate demand impacts. Conventional interest rate policy is not well suited to managing bubbles, and the paper argues for adoption of a new system of asset based reserve requirements (ABRR). Not only can ABRR target asset market excess, they also strengthen counter-cyclical monetary policy.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.elgaronline.com/view/journals/ejeep/7-1/ejeep.2010.01.09.xml
Download Restriction: no

Bibliographic Info

Article provided by Edward Elgar in its journal Intervention.

Volume (Year): 7 (2010)
Issue (Month): 1 ()
Pages: 91-107

as in new window
Handle: RePEc:elg:ejeepi:v:7:y:2010:i:1:p:91-107

Contact details of provider:
Web page: http://www.elgaronline.com/ejeep

Related research

Keywords: asset price bubbles; asset based reserve requirements;

Find related papers by JEL classification:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Hein, Eckhard, 2012. "Finance-dominated capitalism, re-distribution and the financial and economic crises - a European perspective," MPRA Paper 35903, University Library of Munich, Germany.
  2. Hein, Eckhard & Truger, Achim, 2010. "Finance-dominated capitalism in crisis – the case for a Global Keynesian New Deal," MPRA Paper 21175, University Library of Munich, Germany.
  3. Eckhard Hein & Achim Truger & Till van Treeck, 2011. "The European Financial and Economic Crisis: Alternative Solutions from a (Post-) Keynesian Perspective," IMK Working Paper, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute 9-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
  4. Eckhard Hein, 2012. "The Crisis of Finance-dominated Capitalism in the Euro Area: Deficiencies in the Economic Policy Architecture and Deflationary Stagnation Policies," Economics Working Paper Archive, Levy Economics Institute wp_734, Levy Economics Institute.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:elg:ejeepi:v:7:y:2010:i:1:p:91-107. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helen Craven).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.