1 / 34

The Bursting of the Technology Bubble: International Implications

The Bursting of the Technology Bubble: International Implications. Presentation at the Hong Kong Institute for Monetary Research Hong Kong, 31 May 2001 William R White Economic Adviser and Head of the Monetary and Economic Department Bank for International Settlements. Overview.

zaina
Télécharger la présentation

The Bursting of the Technology Bubble: International Implications

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. The Bursting of the Technology Bubble:International Implications Presentation at the Hong Kong Institute for Monetary Research Hong Kong, 31 May 2001 William R White Economic Adviser and Head of the Monetary and Economic Department Bank for International Settlements

  2. Overview • Recent developments. • Some historical context. • Where to from here? • Possible policy responses?

  3. Recent developments: real (1) • A sharp slowdown in the US. • Possible recession in Japan. • Some deceleration in the euro area. • Knock-on effects elsewhere.

  4. Recent developments: real (2) • Slowing down in many sectors. • Including investment. • With international effects.

  5. Recent developments: nominal • Inflation generally well behaved. • But recent uptick in US and euro area. • Although not elsewhere.

  6. Recent developments: financial • Higher then lower policy rates. • Lower then higher long rates. • Falling equity prices. • Widening credit spreads. • Pushing on a string?

  7. Some historical context: facts (1) • Precedents pre-World War I. • Each associated with a New Era. • Back-to-the-future through deregulation and globalisation. • Similarities and differences between Japan (1985-90) and the US (1995-2000).

  8. Some historical context: theories • Hayek, Haberler and the Austrian School. • Credit expansion and New Era optimism... turns to “excessive optimism”... profits and shares collapse... leading to distress in the financial system. • And all without inflation.

  9. Some historical context: facts (2) • The equity boom preceding the bust? • Due to easy policy? • And credit excesses?

  10. Where to from here? • The New Era paradigm. • The Keynesian paradigm. • The Austrian paradigm.

  11. The New Era paradigm • New technology has pushed up potential output and profits. • Buoying share prices, consumption and investment. • And giving better control over inventories.

  12. The Keynesian paradigm • Aggregate demand has outstripped supply. • Postwar slowdowns have all been “hard”. • Possible stagflation could make it worse.

  13. The Austrian paradigm • Many financial imbalances remain. • Many macro imbalances remain. • Possible financial vulnerabilities. • And the need for rebalancing.

  14. Possible policy responses • Given a sharp rebound? • Given a shallow recession? • Given a deep recession?

  15. Given a sharp rebound • Inflation in the US could rise: energy, ULC and the dollar. • Underlying imbalances could worsen. • Could imply the need for tightening.

  16. Given a shallow recession • Inflation less of a problem. • Imbalances are resolved over time. • Unpleasant, but the best of the possible alternatives. • Policy could stay easy for an extended period.

  17. Given a deep recession • Restructure the supply side and recapitalise banks as quickly as possible. • Use monetary and fiscal policies to back in aggregate demand. • Both required because Hayek and Keynes both had a point.

  18. But cheer up, it may never happen!

More Related