Financial Asset Valuations: The Total Demand Approach

TitreFinancial Asset Valuations: The Total Demand Approach
Type de publicationArticle de revue
AuteurZukauskas, Vytautas , Hulsmann, Guido
TypeArticle scientifique dans une revue à comité de lecture
AnnéeSous presse
Paginationsous presse
Titre de la revueQuarterly Review of Economics and Finance
Mots-clésMonetary policy; asset pricing; financial markets; central banks; fiat money; subjective value; value theory
Résumé en anglais

This article provides an explanation of how monetary policy impacts the prices of financial assets relative to the prices of non-financial assets. In the standard view, monetary policy has no such effect. It may influence financial-asset prices in various ways, but it does not all by itself entail any tendency for financial-asset prices to rise faster than the prices of non-financial assets. We argue that the neglected “total demand approach” sheds a different light on this issue. Total-demand theory shows that monetary policy may have such a consequence. It also brings the additional advantage of simplifying the theory of monetary policy, in that it allows to conceptualise unconventional monetary policy and changes in the quality of money within a single theoretical framework.

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