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.
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.
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
Date of revision:
Contact details of provider:
Postal: Colin Clark Building, no 39, St. Lucia, Qld. 4072
Phone: +61 7 3365 6601
Fax: +61 7 3365 6601
Web page: http://www.uq.edu.au/rsmg/index.htm
More information through EDIRC
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, University of Queensland, School of Economics 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.:
- Anna J. Schwartz, 2002.
"Asset Price Inflation and Monetary Policy,"
NBER Working Papers
9321, National Bureau of Economic Research, Inc.
- Anna Schwartz, 2003. "Asset price inflation and monetary policy," Atlantic Economic Journal, International Atlantic Economic Society, International Atlantic Economic Society, vol. 31(1), pages 1-14, March.
- Burton G. Malkiel, 2003. "The Efficient Market Hypothesis and Its Critics," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 17(1), pages 59-82, Winter.
- Barry Eichengreen and Carlos Arteta., 2000.
"Banking Crises in Emerging Markets: Presumptions and Evidence,"
Center for International and Development Economics Research (CIDER) Working Papers, University of California at Berkeley
C00-115, University of California at Berkeley.
- Barry Eichengreen & Carlos Arteta, 2001. "Banking Crises in Emerging Markets: Presumptions and Evidence," Macroeconomics, EconWPA 0012012, EconWPA.
- Eichengreen, Barry & Arteta, Carlos, 2000. "Banking Crises in Emerging Markets: Presumptions and Evidence," Center for International and Development Economics Research, Working Paper Series, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkele qt3pk9t1h2, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Goodhart, Charles, 2001. "What Weight Should Be Given to Asset Prices in the Measurement of Inflation?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(472), pages F335-56, June.
- repec:fth:sydnec:99-19 is not listed on IDEAS
- Alchian, Armen A & Klein, Benjamin, 1973. "On a Correct Measure of Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 5(1), pages 173-91, Part I Fe.
- C. Goodhart, 2001. "What Weight Should be Given to Asset Prices in the Measurementof Inflation?," DNB Staff Reports (discontinued), Netherlands Central Bank 65, Netherlands Central Bank.
- Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard H, 1990. "Experimental Tests of the Endowment Effect and the Coase Theorem," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(6), pages 1325-48, December.
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, School of Economics, University of Wollongong, NSW, Australia wp09-01, School of Economics, University of Wollongong, NSW, Australia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (David Adamson).
If references are entirely missing, you can add them using this form.