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 Risk and Sustainable Management Group, University of Queensland in its series Australian Public Policy Program Working Papers with number WPP04_3.
Date of creation: Jun 2004
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Other versions of this item:
- Bell, Stephen & Quiggin, John, 2003. "Asset Price Instability and Policy Responses: The Legacy of Liberalisation," Risk and Sustainable Management Group Working Papers 151505, University of Queensland, School of Economics.
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-05-23 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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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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