Abstract

TOPOROWSKI, Jan. Keynes and monetary policy in speculative markets. Inv. Econ [online]. 2002, vol.62, n.242, pp.13-32. ISSN 0185-1667.

Asset inflation in securities markets has important balance sheet effects which spread financia! fragility into banking and corporate sectors through balance sheet effects. Monetary policy becomes less effective as a means of regulating output price iriflation, economic activity and asset inflation. The analysis. is similar to the one advanced by Keynes in chapter 17 of the General fheory (on 'own rates of interest'), with the important difference that Keynes was advancing in that chapter a monetary theory of under-employment, rather than an analysis of financial fragility.