I've got a few days leave this week that I'm spending at home sorting out a few bits and pieces and reading, and may not be blogging much. One of the books I want to make some headway with is Asset Price Bubbles: The Implications for Monetary, Regulatory and International Policies, which is a collection of just over 40 essays that came out of a conference in 2002. This is an area that I really want to understand a bit better, especially given what has happened recently.
Having read a few of the essays, in addition to the useful overview, it strikes me that there is already some significant common ground about bubbles, though it isn't actually that helpful for addressing them. For example it seems to be a fairly widely held view that it is very difficult for central banks, regulators etc to identify bubbles in advance.
In addition there is a fair bit of consensus that financial innovation can work against the emergence of bubbles, rather than be a cause of them. I want to read around this argument quite a bit more, but I don't have a problem with it at face value. In understanding what has gone wrong in the capital markets lately I think we have to distinguish between whether there inherent flaws in some of the new financial instruments, and whether rather they were misunderstood/misrepresented.
Anyway it looks like it will provide some geeky reading over the next few days.
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