文档介绍：Destructive Creation:
Unintended Consequences
of the rise of finance This is a paper-length treatment of a longer project. Please contact the author at ******@ to obtain the full-length version, including the full case studies
Gregory W. Fuller
2480 16th St. NW ., Apt. 614
Washington DC 20009
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Prepared for EUSA Thirteenth Biennial Conference
Baltimore, MD
May 10, 2013
Not for quotation or citation – ments warmly ed!
Financial markets and institutions play an essential role in economic life. We rely on them to gather together idle savings and to convert those savings into usable resources. And we depend on financial markets to distribute those resources in a way which fuels growth, puts capital to its most productive use, guides businesses toward sound decisions, and helps us mitigate life's inherent risks. As Nobel Laureate Robert C. Merton (1990) put it, "the core function of the financial system is to facilitate the allocation and deployment of economic resources, both spatially and across time, in an uncertain environment." Finance, when it performs this core social function well, is an indispensable tool for improving productivity and material well-being.
Even so, the financial crisis of 2007-08 and the economic troubles which followed are a reminder that even the most sophisticated financial markets in the world can malfunction with disastrous consequences. While liberalized financial systems are more capable of mobilizing and allocating resources, it does not necessary follow that market pressures incentivize allocations which are welfare-maximizing. This is the central conundrum of the liberalization process: while today’s developed markets can marshal and cheaply distribute more financial resources than ever before, they are increasingly prone to allocate those resources in dubious ways. The focus of this paper is on one such unintended consequence of liberalization – the rise in the share of financial reso