Asset Price Inflation in the 1980s: A Flow of Funds Perspective
40 Pages Posted: 15 Feb 2006
Date Written: October 1993
This paper examines how and why financial resources were channeled almost exclusively to specific asset markets in Japan, the United Kingdom, and the United States in the late 1980s. A decline in demand for funds by traditional borrowers, and a shift by savers from banks toward indirect securities investments were critical factors in all three cases. Until intermediaries and investors learned to evaluate new opportunities, funds were recycled in certain asset markets. The pressures on Japanese asset markets were particularly intense because of the size of Japan`s domestic saving relative to traditional domestic investment opportunities.
JEL Classification: E31, E44, G21
Suggested Citation: Suggested Citation