The 2008 World Financial Crisis and Market Quality Theory

Makoto Yano
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Makoto Yano: Kyoto University and Keio University, Kyoto Institute of Economic Research, Yoshida-honcho, Sakyo-ku, Kyoto 606-8501, Japan.

Asian Economic Papers, 2010, vol. 9, issue 3, pages 174-194

Abstract: The present study demonstrates that the current world financial crisis is attributable to, among other things, the failure to coordinate Japanese and U.S. monetary policies in 2004, allowing Japan to abandon its currency intervention while pegging its interest rate at zero at the same time that the United States departed from its low interest rate policy. At a deeper level, these factors can be explained by the productivity increases resulting from the internet technology revolution, which lowered market quality by rendering obsolete the market infrastructure built in the latter half of the twentieth century. (c) 2010 The Earth Institute at Columbia University and the Massachusetts Institute of Technology.

Date: 2010
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