Asset Prices and the Financial Crisis of 2007-09: An Overview of Theories and Policies
Forum for Social Economics, Vol. 39, No. 3, pp. 279-286, 2010
10 Pages Posted: 25 Jan 2011 Last revised: 28 Jan 2011
Date Written: January 28, 2010
The financial crisis of 2007-09 has led to a rethinking of the role of monetary and financial regulatory policy. It has also called into question the benefits of financial innovation and monetary policy that focuses solely on inflation and the output gap. This paper discusses financial instabilities in general, the recent financial crisis as well as the appropriate role of monetary and financial regulatory policy in dealing with asset bubbles. The paper concludes by evaluating appropriate policies to reduce the economic impact of future financial crises.
Keywords: Asset Bubbles, Financial Crisis, Regulation
JEL Classification: E50, E52, E58
Suggested Citation: Suggested Citation