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Sending the Herd off the Cliff Edge

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  • Avinash Persaud

Abstract

In the international financial arena, policy makers chant three things: market-sensitive risk-management, transparency and prudential standards. The message is we do not need a new world order, just to improve the workings of the existing one. While many believe this is an inadequate response to the financial crises of the past two decades, few argue against this line. Perhaps more should. There is compelling evidence that in the short run, markets find it hard to distinguish between the good and the unsustainable, market players herd and contagion is common. In this environment, market-sensitive risk management and transparency can destabilise markets.

Suggested Citation

  • Avinash Persaud, 2000. "Sending the Herd off the Cliff Edge," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 1(4), pages 15-26, October.
  • Handle: RePEc:wej:wldecn:35
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    Cited by:

    1. Ian W. H. Parry, 2003. "Fiscal Interactions and the Case for Carbon Taxes Over Grandfathered Carbon Permits," Oxford Review of Economic Policy, Oxford University Press, vol. 19(3), pages 385-399.

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