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dc.contributor.authorTymoigne, Éricen_US
dc.description.abstractThe paper reviews the current literature on the subject in both the New Consensus and Post Keynesian frameworks. It shows that both approaches give to central banks a wrong goal (inflation, distribution, curbing speculation, and so on) and a wrong instrument (interest rate rule). The paper claims that central banks should focus their attention on maintaining financial stability and leave other problems to public institutions better suited for this task. In doing so they should develop new tools of intervention and leave policy interest rates unchanged, close to or at zero percent. Central banks have been created to deal with financial matters (government finance and financial stability) and should stick to this. Central banks, then, have a large amount of improvements to make, both as reformers and as guides for the financial community. Their main instrument should be an analysis of the financial fragility of the financial system and of the different economic sectors. In this context, it is shown that the notion of bubble” does not matter for policy purposes, and that the current regulatory system lacks an institution that is able to deal effectively with solvency crisis.en_US
dc.publisher|aLevy Economics Institute of Bard College |cAnnandale-on-Hudson, NYen_US
dc.relation.ispartofseries|aWorking papers // The Levy Economics Institute |x456en_US
dc.subject.keywordAsset Pricesen_US
dc.subject.keywordFinancial Fragilityen_US
dc.subject.keywordCentral Bankingen_US
dc.titleAsset prices, financial fragility, and central bankingen_US
dc.type|aWorking Paperen_US

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