For decades, policymakers’ perception has been that large capital inflows can fuel booms in asset prices. If this were true, bonanzas in capital inflows would imply an important risk to financial stability, since booms in asset prices are leading indicators of financial crises.
Capital inflows and booms in asset prices: Going beyond the current account
Eduardo Olaberría, 7 December 2013
Dark side of housing-price appreciation
Indraneel Chakraborty, Itay Goldstein, Andrew MacKinlay, 25 November 2013
Policymakers around the world often worry about decreases in real-estate prices and other asset prices, and take measures to prevent them. For example, in the aftermath of the financial crisis, the Federal Reserve has engaged in large-scale asset purchases – especially of mortgage-backed assets – to support the housing market and, in turn, the overall economy.
Speculative investors and transaction tax in the housing market
Yuming Fu, Wenlan Qian, Bernard Yeung, 7 November 2013
The Global Financial Crisis revived the idea of using transaction taxes to discourage short-term speculative trades. Such trading is often blamed for causing excess volatility in financial markets. Tobin (1978) proposed the tax more than 40 years ago, to “throw some sand in the wheels of speculation”, specifically for currency trading.
Fama, Hansen, and Shiller: An excellent choice of Nobel laureates
Tarun Ramadorai, 24 October 2013
The recent announcement of the 2013 Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel has delighted researchers working in empirical asset pricing.
The Inefficient Markets Hypothesis: Why Financial Markets Do Not Work Well in the Real World
Roger E. A. Farmer , Carine Nourry, Alain Venditti, 13 January 2013
Vox readers can download Discussion Paper 9283 for free here.
Origins and macroeconomic implications of asset bubbles
Alberto Martin, Jaume Ventura, 16 February 2011
What is a bubble? Today’s economies often experience large movements in asset prices that have significant macroeconomic effects. Given that many of these movements in asset prices seem unrelated to economic conditions or fundamentals, they have come to be called bubbles, whether swelling or bursting.
Disasters, recoveries, and the equity premium
Robert Barro, Emi Nakamura, Jón Steinsson, Jose F. Ursua, 8 July 2010
Previous research, including Rietz (1988) and Gabaix (2009), suggests that the potential for rare, but large, economic disasters helps to explain the equity-premium and related asset-pricing puzzles. Motivated by these findings, our research described in Barro et al.
Keynes and the Crisis
Axel Leijonhufvud, 13 May 2008
Central banking doctrine in light of the crisis
Axel Leijonhufvud, 13 May 2008
On April 8 of this year, Paul Volcker addressed the Economic Club of New York about the current crisis. The Federal Reserve, he noted, has gone to “the very edge” of its legal authority.
Can monetary policy really be used to stabilise asset prices?
Katrin Assenmacher-Wesche, Stefan Gerlach, 12 March 2008
The subprime crisis and falling property prices in the US and elsewhere have put central banks back in the firing line.1 Many commentators are noting that asset price booms, in particular those affecting residential property prices, have triggered many previous episodes of financial instability (Ahearne et al. 2005, Goodhart and Hofmann 2007).
- A tale of two depressions: What do the new data tell us? February 2010 updateEichengreen, O’Rourke
- The ECB’s stealth bailoutSinn
- Educated in America: College graduates and high school dropoutsHeckman, LaFontaine
- Eurozone breakup would trigger the mother of all financial crisesEichengreen
- Panic-driven austerity in the Eurozone and its implicationsDe Grauwe, Ji
Adelman, 28 October 2013
Reichlin, Giugliano, 7 November 2013
Holmes, McGrattan, Prescott
Beck, De Haas, Ongena
CEPR Policy Research
- The buyer margins of firms' exportsCarballo, Ottaviano, Volpe
- Commodity and Equity Markets: Some Stylized Facts from a Copula ApproachDelatte, Lopez
- Ethnic Unemployment Rates and Frictional MarketsGobillon, Rupert, Wasmer
- Finance and Poverty: Evidence from IndiaAyyagari, Beck, Hoseini
- The Manipulation of Basel Risk-WeightsMariathasan, Merrouche
- What’s wrong with Europe?Baldini, Manasse
- How the EZ crisis is permanently changing EU institutionsMicossi
- WTO 2.0: Global governance of supply-chain tradeBaldwin
- Is US economic growth over? Faltering innovation confronts the six headwindsGordon
- The economic crisis: How to stimulate economies without increasing public debtWood