Asset Price Instability and Policy Responses: The Legacy of Liberalisation

Stephen Bell () and John Quiggin
Additional contact information
Stephen Bell: University of Queensland

No WPP04_3, Australian Public Policy Program Working Papers from Risk and Sustainable Management Group, University of Queensland

Abstract: The debate about the dynamics and potential policy responses to asset inflation has intensified in recent years. Some analysts, notably Borio and Lowe, have called for 'subtle' changes to existing monetary targeting frameworks to try to deal with the problems of asset inflation and have attempted to developed indicators of financial vulnerability to aid this process. In contrast, this paper argues that the uncertainties involved in understanding financial market developments and their potential impact on the real economy are likely to remain too high to embolden policy makers. The political and institutional risks associated with policy errors are also significant. The fundamental premise that a liberalised financial system is based on 'efficient' market allocation cannot be overlooked. The corollary is that any serious attempt to stabilize financial market outcomes must involve at least a partial reversal of deregulation.

JEL-codes: G18 (search for similar items in EconPapers)
Date: 2004-06
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.uq.edu.au/rsmg/WP/WPP04_3.pdf (application/pdf)

Related works:
Journal Article: Asset Price Instability and Policy Responses: The Legacy of Liberalization (2006)
Working Paper: Asset Price Instability and Policy Responses: The Legacy of Liberalisation (2003)
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: https://EconPapers.repec.org/RePEc:rsm:pubpol:p04_3

Access Statistics for this paper

More papers in Australian Public Policy Program Working Papers from Risk and Sustainable Management Group, University of Queensland Contact information at EDIRC.
Bibliographic data for series maintained by David Adamson ( this e-mail address is bad, please contact ).