This volume critically re-examines the profession's understanding of asset bubbles in light of the global financial crisis of 2007-09. It is well known that bubbles have occurred in the past, with the October 1929 crash as the most demonstrative example. However, the remarkably well-behaved performance of the US economy from 1945 to 2006, and, in particular during the Great Moderation period of 1984 to 2006, assured the economics profession and monetary policymakers that asset bubbles could be effectively managed with little or no real economic impact. The recent financial crisis has now triggered a debate about the emergence of a sequence of repeated bubbles in the Nasdaq market, housing market, credit market, and commodity markets. The realities of the crisis have intensified theoretical modeling, empirical methodologies, and debate on policy issues surrounding asset price bubbles and their potentially adverse economic impact if poorly managed. Taking a novel approach, the editors of this book present five classic papers that represent accepted thinking about asset bubbles prior to the financial crisis. They also include original papers challenging orthodox thinking and presenting new insights. A summary essay highlights the lessons learned and experiences gained since the crisis.
| ISBN | 0199844402 | | Pages | 480 | | ISBN13 | 9780199844401
(What's this?) | | Weight (grammes) | 674 | | Publisher | Oxford University Press Inc | | Published in | New York | | Imprint | Oxford University Press Inc | | Height (mm) | 238 | | Format | Paperback | | Width (mm) | 166 | | Publication date | 01 Mar 2012 | | Spine width (mm) | 32 | | DEWEY | 338.542 | | Academic level | Professional / Scholarly | | DEWEY edition | DC23 | |
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INTRODUCTION ; 1. NEW PERSPECTIVES ON ASSET PRICE BUBBLES: AN OVERVIEW ; DOUGLAS D. EVANOFF, GEORGE G. KAUFMAN AND A.G. MALLIARIS ; BUBBLES: THEORY AND EVIDENCE ; 2. CHURNING BUBBLES ; FRANKLIN ALLEN AND GARY GORTON. SEMINAL RESEARCH PAPER: THE REVIEW OF ECONOMIC STUDIES, VOLUME 60 (1993). ; 3. RETHINKING THEORETICAL MODELS OF BUBBLES: REFLECTIONS INSPIRED BY THE FINANCIAL CRISIS AND THE ALLEN AND GORTON'S PAPER ON CHURNING BUBBLES ; GADI BARLEVY ; CONSEQUENCES OF BUBBLES BURSTING ; 4. THE JAPANESE BANKING CRISIS: WHERE DID IT COME FROM AND HOW WILL IT END? TAKEO HOSHI AND ANIL K. KASHYAP. SEMINAL RESEARCH PAPER: NBER MACROECONOMICS ANNUAL 1999, VOL 14 (2000). ; 5. THE IMPACT OF THE INTERNATIONAL FINANCIAL CRISIS ON ASIA AND THE PACIFIC: HIGHLIGHTING MONETARY POLICY CHALLENGES FROM AN ASSET PRICE BUBBLE PERSPECTIVE ; ANDREW FILARDO ; BUBBLES AND MONETARY POLICY ; 6. MONETARY POLICY AND ASSET PRICE VOLATILITY ; BEN BERNANKE AND MARK GERTLER. SEMINAL RESEARCH PAPER: ECONOMIC REVIEW, FEDERAL RESERVE BANK OF KANSAS CITY (1999). ; 7. MONETARY POLICY AND ASSET PRICE VOLATILITY: SHOULD WE REFILL THE BERNANKE-GERTLER PRESCRIPTION? ; KENNETH N. KUTTNER ; BUBBLES AND MACROPRUDENTIAL REGULATION ; 8. TOWARDS A MACROPRUDENTIAL FRAMEWORK FOR FINANCIAL SUPERVISION AND REGULATION? HTTP://WWW.BIS.ORG/PUBL/WORK128.PDF ; CLAUDIO BORIO. SEMINAL RESEARCH PAPER: CESIFO ECONOMIC STUDIES, VOLUME 49 (2003). ; 9. BANK LIQUIDITY AND BUBBLES: WHY CENTRAL BANKS SHOULD LEAN AGAINST LIQUIDITY ; VIRAL V. ACHARYA AND HASSAN NAQVI ; BUBBLES: BEHAVIORAL EXPLANATIONS ; 10. OVERCONFIDENCE AND SPECULATIVE BUBBLES ; JOSE A. SCHEINKMAN AND WEI XIONG. SEMINAL RESEARCH PAPER: JOURNAL OF POLITICAL ECONOMY, VOLUME 111 (2003). ; 11. ASSET BUBBLES: INSIGHTS FROM BEHAVIORAL FINANCE ; WERNER DE BONDT ; BUBBLES: KEYNOTE PRESENTATIONS ; 12. AN OLD PERSPECTIVE ON ASSET PRICE BUBBLES POLICY ; WILLIAM POOLE ; 13. STRUGGLING TO ESCAPE FROM 'ASSUMPTION 14' ; BENJAMIN M. FRIEDMAN ; NEW IDEAS ON ASSET PRICE BUBBLES ; 14. MONETARY POLICY AND STOCK MARKET BOOMS ; LAWRENCE J. CHRISTIANO, COSMIN ILUT, ROBERTO MOTTO, AND MASSIMO ROSTAGNO ; 15. LEVERAGE AND BUBBLES: THE NEED TO MANAGE THE LEVERAGE CYCLE ; JOHN GEANAKOPLOS ; ASSET BUBBLES, CENTRAL BANKS AND INVESTMENTS ; 16. ASSET PRICE BUBBLES AND CENTRAL BANK POLICIES: THE CRASH OF THE JACKSON HOLE CONSENSUS ; A. G. MALLIARIS ; 17. DO BUBBLES LEAD TO OVERINVESTMENT? A REVEALED PREFERENCE APPROACH ; ROBERT CHIRINKO AND HUNTLEY SCHALLER
"This unique and thoughtfully constructed volume systematically reconsiders recent classic contributions to formal theoretical modeling of asset pricing bubbles. The originality and comprehensiveness of the collection is as impressive as the star-studded cast of contributors. A must read for anyone trying to come to grips with the new directions in monetary policy and macroprudential financial regulation."--Charles W. Calomiris, Columbia Business School
"Perhaps the most important, but most intractable, question for monetary policy today is whether, and if so how, a Central Bank should lean against a strong asset price boom. This book collects contributions from the best and brightest economists in the field to discuss this issue. I thoroughly recommend it."--C. Goodhart, London School of Economics
"The experience of the last several years has reminded us that central banks face no greater challenge than maintaining financial stability. This volume does a masterful and
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