Asset price bubbles and counter-cyclical monetary policy: Why central banks have been wrong and what should be done
AbstractCentral 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 InfoIf 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Edward Elgar in its journal Intervention.
Volume (Year): 7 (2010)
Issue (Month): 1 ()
Contact details of provider:
Web page: http://www.e-elgar.com/journals/journal_main.lasso?ref=EJEEP
asset price bubbles; asset based reserve requirements;
Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- E60 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - General
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Eckhard Hein & Achim Truger & Till van Treeck, 2011. "The European Financial and Economic Crisis: Alternative Solutions from a (Post-) Keynesian Perspective," IMK Working Paper 9-2011, IMK at the Hans Boeckler Foundation, Macroeconomic Policy Institute.
- Hein, Eckhard & Truger, Achim, 2010.
"Finance-dominated capitalism in crisis: The case for a Global Keynesian New Deal,"
IPE Working Papers
06/2010, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
- Eckhard Hein & Achim Truger, 2012. "Finance-dominated capitalism in crisis—the case for a global Keynesian New Deal," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 35(2), pages 187-213, January.
- 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.
- Daniel Detzer, 2012.
"New instruments for banking regulation and monetary policy after the crisis,"
European Journal of Economics and Economic Policies: Intervention,
Edward Elgar, vol. 9(2), pages 333-254.
- Detzer, Daniel, 2012. "New instruments for banking regulation and monetary policy after the crisis," IPE Working Papers 13/2012, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
- Hein, Eckhard, 2012.
"Finance-dominated capitalism, re-distribution and the financial and economic crises - a European perspective,"
35903, University Library of Munich, Germany.
- Hein, Eckhard, 2012. "Finance-dominated capitalism, re-distribution and the financial and economic crises: A European perspective," IPE Working Papers 14/2012, Berlin School of Economics and Law, Institute for International Political Economy (IPE).
- 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 wp_734, Levy Economics Institute, The.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Torsten Niechoj).
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.