Asset price regulators, unite: You have the macroeconomy to win and the microeconomic losses are small

Publication Type:
Journal Article
Economic Record, 2011, 87 (278), pp. 449 - 464
Issue Date:
Filename Description Size
Thumbnail2010000101OK.pdf296.12 kB
Adobe PDF
Full metadata record
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. © 2011 The Economic Society of Australia.
Please use this identifier to cite or link to this item: