Asset Price Instability and Policy Responses: The Legacy of Liberalisation
AbstractThe debate about the dynamics and potential policy responses to asset inflation has intensified in recent years. Some analysts, notably Borio and Lowe, have called for 'subtle' changes to existing monetary targeting frameworks to try to deal with the problems of asset inflation and have attempted to developed indicators of financial vulnerability to aid this process. In contrast, this paper argues that the uncertainties involved in understanding financial market developments and their potential impact on the real economy are likely to remain too high to embolden policy makers. The political and institutional risks associated with policy errors are also significant. The fundamental premise that a liberalised financial system is based on 'efficient' market allocation cannot be overlooked. The corollary is that any serious attempt to stabilize financial market outcomes must involve at least a partial reversal of deregulation
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Bibliographic InfoPaper provided by University of Queensland, School of Economics in its series Risk and Sustainable Management Group Working Papers with number 151505.
Date of creation: 02 Dec 2003
Date of revision:
Financial Economics; Risk and Uncertainty; G18;
Other versions of this item:
- Stephen Bell & John Quiggin, 2004. "Asset Price Instability and Policy Responses: The Legacy of Liberalisation," Australian Public Policy Program Working Papers WPP04_3, Risk and Sustainable Management Group, University of Queensland.
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
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Blog mentionsAs found by EconAcademics.org, the blog aggregator for Economics research:
by John Quiggin in John Quiggin on 2013-01-16 19:13:15
by John Quiggin in Crooked Timber on 2013-01-16 19:11:39
- Pol, Eduardo, 2009. "Regulating Financial Innovations Without Apology," Economics Working Papers wp09-01, School of Economics, University of Wollongong, NSW, Australia.
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