Private Finance and Public Policy
This paper articulates a logical foundation-drawn from disparate literatures-for understanding why safeguarding financial stability is an important economic policy objective. The paper also explains why private aspects of finance provide broader social economic benefits and have the characteristics of public goods. Unique aspects of finance are examined, as are the linkages between finance, money, and the real economy. Sources of market imperfections in finance are identified and their implications are analyzed. The arguments imply that reaping the full private and social economic benefits of finance requires both private-collective and publicpolicy involvement as well as a delicate balance between maximizing the benefits of positive externalities (and public goods) and minimizing the costs (including potential instabilities) of other sources of market imperfections in finance.
|Date of creation:||Dec 2006|
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- Greenwood, Jeremy & Jovanovic, Boyan, 1990.
"Financial Development, Growth, and the Distribution of Income,"
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- Greenwood, J. & Jovanovic, B., 1990. "Financial Development, Growth, And The Distribution Of Income," University of Western Ontario, The Centre for the Study of International Economic Relations Working Papers 9002, University of Western Ontario, The Centre for the Study of International Economic Relations.
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- Garry J. Schinasi, 2003. "Responsibility of Central Banks for Stability in Financial Markets," IMF Working Papers 03/121, International Monetary Fund.
- Frank P. Maier-Rigaud & Jose Apesteguia, 2004. "The Role of Rivalry. Public Goods versus Common-Pool Resources," Working Paper Series of the Max Planck Institute for Research on Collective Goods 2004_2, Max Planck Institute for Research on Collective Goods.
- David Cass & Menahem E. Yaari, 1966. "A Re-examination of the Pure Consumption Loans Model," Journal of Political Economy, University of Chicago Press, vol. 74, pages 353-353.
- David Cass & Menahem E. Yaari, 1965. "A Re-Examination of the Pure Consumption Loans Model," Cowles Foundation Discussion Papers 195, Cowles Foundation for Research in Economics, Yale University.
- Michael Bordo, 2000. "Sound Money and Sound Financial Policy," Journal of Financial Services Research, Springer;Western Finance Association, vol. 18(2), pages 129-155, December. Full references (including those not matched with items on IDEAS)
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