Who's Minding the Store?

Robert J. Shiller
The Century Foundation | October 1992 | ISBN: 087078330 & 9780870783302

Managers of firms whose shares are traded find themselves operating under wrong incentives (making decisions in light of anticipated effects on the market rather than the true value of their company) and securities’ values are often removed from their true value, causing costly and unnecessary disruptions in the economy. But it appears to be impossible to tax or otherwise discourage harmful speculative behavior directly. Policy measures to reduce excessive speculative behavior might include encouraging long-term relationship investing by institutions, bonus incentive systems for managers tied to longer term returns on stock, and occasional efforts by the Federal Reserve to stabilize the stock market through monetary policy or margin requirements.

Contents: [Foreword by Richard C. Leone, Report of the Task Force, Dissent by James Tobin, Comment by Horace DePodwin], Who’s Minding the Store: 1. Speculation and Market Volatility, 2. Recent Concerns and Policy Proposals, 3. Speculation and Economic Theory, 4. Today’s Concerns with Speculative Behavior, 5. Measures for Dealing with Speculation and Short-Termism, 6. Discount Rates and Saving Rates, 7. Conclusion: Sorting Through an Array of Policy Options Notes, References, Index