Asset Price Regulators, Unite: You have the Macroeconomy to Win and the Microeconomic Losses are Small
The global financial crisis (GFC) has rekindled debate about the desirability of governmental interference in asset markets – either through the operation of policy levers, or through the chosen institutional setup. In this article, we quantify economic costs because of mispricing of real assets in...
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Published in | The Economic record Vol. 87; no. 278; pp. 449 - 464 |
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Main Authors | , , , |
Format | Journal Article |
Language | English |
Published |
Oxford, UK
Blackwell Publishing Ltd
01.09.2011
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Subjects | |
Online Access | Get full text |
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Summary: | The global financial crisis (GFC) has rekindled debate about the desirability of governmental interference in asset markets – either through the operation of policy levers, or through the chosen institutional setup. In this article, we quantify economic costs because of mispricing of real assets in the USAGE model of the USA. The microeconomic costs of misallocated capital are small. The model suggests that regulators (or central banks) who risk mispricing by influencing asset prices do so without incurring large economic costs. |
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Bibliography: | We wish to acknowledge the generous support of the UTS Paul Woolley Centre for Capital Market Dysfunctionality, without which this work would not have been possible. We thank Danny Yeung for invaluable research assistance. ark:/67375/WNG-QBH50TW5-S ArticleID:ECOR702 istex:D95F982ED0ED20B81F8F2DCDB02CFFA53D0F590B ObjectType-Article-2 SourceType-Scholarly Journals-1 ObjectType-Feature-1 content type line 23 |
ISSN: | 0013-0249 1475-4932 |
DOI: | 10.1111/j.1475-4932.2010.00702.x |