Monday, December 3, 2007

Subprime Series and Financial Stability (fg)

There is a series of 4 essays from Stephen Cecchetti exploring the lessons from the subprime turmoil. Cecchetti is one of the proponents of reacting to asset price misvaluations in a pre-emptive way. The series argues that financial crises are intrinsic to the modern economy, but both individuals and governments should make adjustments to reduce the frequency of financial crises and their impact on the broader economy. As the reader might recognize, we could indentify Cecchetti as favouring the view of an inherent instable financial system (see for a short discussion in this blog: link1, link2, link3, link4). Here are the 4 essays.