06541oam 22013334 450 991079690340332120240117184826.01-4983-9762-X1-4983-0415-X(CKB)3710000000373839(EBL)1983703(SSID)ssj0001466558(PQKBManifestationID)11834961(PQKBTitleCode)TC0001466558(PQKBWorkID)11505825(PQKB)11515816(MiAaPQ)EBC1983703(Au-PeEL)EBL1983703(CaPaEBR)ebr11027497(CaONFJC)MIL740891(OCoLC)905985521(IMF)WPIEA2015027(EXLCZ)99371000000037383920020129d2015 uf 0engurcnu||||||||txtrdacontentcrdamediacrrdacarrierAsset bubbles re-thinking policy for the age of asset management /Bradley JonesWashington, D.C. :International Monetary Fund,2015.1 online resource (60 pages)IMF Working PapersDescription based upon print version of record.1-4755-7620-X Includes bibliographical references.Cover; Abstract; Contents; I. Introduction; Figures; Figure 1. Worldwide Financial Assets and Institutional Assets; Figure 2. Bank Assets vs. Investment Firm Assets under Management; II. The 'Clean vs. Lean' Debate: A Survey; Tables; Table 1. Dimensions of the Traditional 'Clean vs. Lean' Debate; III. Theories of (In)Efficient Markets and Speculative Bubbles; A. Bubbles and the (In)Efficiency of Markets - A Review; B. Competing Models of Bubble Formation and Persistence; Table 2. Stylized Summary of Asset Pricing/Bubble Models; Figure 3. Benchmark Decomposition of Hedge Fund ReturnsFigure 4. Subjective vs. Objective Expected Returns IV. Policy Implications; Table 3. Mapping Policy Responses to Bubble Models; Figure 5. Relative 10-year Annualized Out performance of Fundamental-based Indices; V. Concluding Remarks and Future ResearchIn distilling a vast literature spanning the rational— irrational divide, this paper offers reflections on why asset bubbles continue to threaten economic stability despite financial markets becoming more informationally-efficient, more complete, and more heavily influenced by sophisticated (i.e. presumably rational) institutional investors. Candidate explanations for bubble persistence—such as limits to learning, frictional limits to arbitrage, and behavioral errors—seem unsatisfactory as they are inconsistent with the aforementioned trends impacting global capital markets. In lieu of the short-term nature of the asset owner—manager relationship, and the momentum bias inherent in financial benchmarks, I argue that the business risk of asset managers acts as strong motivation for institutional herding and ‘rational bubble-riding.’ Two key policy implications follow. First, procyclicality could intensify as institutional assets under management continue to grow. Second, remedial policies should extend beyond the standard suite of macroprudential and monetary measures to include time-invariant policies targeted at the cause (not just symptom) of the problem. Prominent among these should be reforms addressing principal-agent contract design and the implementation of financial benchmarks.IMF Working Papers; Working Paper ;No. 2015/027Asset-liability managementFinancial risk managementMonetary policyEconomic policyFinance: GeneralimfFinancial Risk ManagementimfMacroeconomicsimfFinancial Markets and the MacroeconomyimfCentral Banks and Their PoliciesimfFinancial CrisesimfInformation and Market EfficiencyimfEvent StudiesimfInternational Financial MarketsimfGeneral Financial Markets: Government Policy and RegulationimfPrice LevelimfInflationimfDeflationimfGeneral Financial Markets: General (includes Measurement and Data)imfEconomic & financial crises & disastersimfFinanceimfAsset pricesimfAsset bubblesimfAsset managementimfFinancial sector stabilityimfStock marketsimfPricesimfFinancial crisesimfAsset and liability managementimfFinancial sector policy and analysisimfFinancial marketsimfAsset-liability managementimfFinancial services industryimfStock exchangesimfUnited StatesimfAsset-liability management.Financial risk management.Monetary policy.Economic policy.Finance: GeneralFinancial Risk ManagementMacroeconomicsFinancial Markets and the MacroeconomyCentral Banks and Their PoliciesFinancial CrisesInformation and Market EfficiencyEvent StudiesInternational Financial MarketsGeneral Financial Markets: Government Policy and RegulationPrice LevelInflationDeflationGeneral Financial Markets: General (includes Measurement and Data)Economic & financial crises & disastersFinanceAsset pricesAsset bubblesAsset managementFinancial sector stabilityStock marketsPricesFinancial crisesAsset and liability managementFinancial sector policy and analysisFinancial marketsAsset-liability managementFinancial services industryStock exchanges332.10681Jones Bradley42705DcWaIMFBOOK9910796903403321Asset bubbles3735701UNINA