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Rethinking monetary and financial stability

In: A Modern Guide to Rethinking Economics

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  • Faruk Ãœlgen

Abstract

The neoclassical real-economic equilibrium mainly rests on the competitive-efficient-market hypothesis and regards money and finance as mere appendices. Monetary stability is related to price stability and neutral monetary policy, and financial stability to the allocative efficiency of financial intermediation. Subsequent policies assume that financial markets can self-regulate in case of shocks and do not aim to strengthen public control over the financial system. However, the recurrent crises of the last decades point out that liberalized/deregulated financial markets are prone to systemic crises fuelled by endogenous dynamics. New regulatory alternatives are then required to ensure systemic stability.

Suggested Citation

  • Faruk Ãœlgen, 2017. "Rethinking monetary and financial stability," Chapters, in: Louis-Philippe Rochon & Sergio Rossi (ed.), A Modern Guide to Rethinking Economics, chapter 12, pages 217-239, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:16503_12
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    Cited by:

    1. Javidanrad, Farzad, 2021. "Paradox of Monetary Profit, Shortage of Money in Circulation & Financialisation," The Warwick Economics Research Paper Series (TWERPS) 1365, University of Warwick, Department of Economics.

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    Keywords

    Economics and Finance;

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