A Note On Volatility

Document Type


Publication Date

Summer 1995

Published In

Journal Of Post Keynesian Economics


Many feel that the short-run volatility of financial variables has increased over time. Allegedly, such greater volatility has created more financial crisis and has increased problems facing monetary authorities in managing the financial system. Economic volatility is an important worry for policymakers. Stability or low volatility is a useful property for markets because short- and long-run price signals are more congruent, price spreads are generally less, and the operation of the market requires fewer resources since information costs are lower.

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