Monetary Policy in an Era of Capital Market Inflation

Jan Toporowski
Additional contact information
Jan Toporowski: Reader in Economics, South Bank University

Macroeconomics from EconWPA

Abstract: The theory of capital market inflation argues that the values of long- term securities markets are determined by a disequilibrium inflow of funds into those markets. The resulting over-capitalization of companies leads to increased fragility of banking and undermines monetary policy and stable relationships between short- and long-term interest rates, such as that postulated by Keynes in his theory of the speculative demand for money. Moreover, while the increased fragility of banking is an immediate effect, capital market inflation also creates an unstable Ponzi financing structure in the capital market as a whole.

JEL-codes: E (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-mon
Date: 2000-10-06
Note: Type of Document - Adobe Acrobat PDF; prepared on IBM PC; to print on PostScript; pages: 18; figures: included
View list of references

Downloads: (external link)
http://129.3.20.41/eps/mac/papers/0004/0004026.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpma:0004026

Access Statistics for this paper

More papers in Macroeconomics from EconWPA
Series data maintained by EconWPA ().