One of the possible solutions to asset-price bubbles is the enforcement of macroprudential regulation. Financial intermediaries have
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One of the possible solutions to asset-price bubbles is the enforcement of macroprudential regulation. Financial intermediaries have an incentive to constantly look for profitable opportunities, which often implies the design of new financial instruments and even the circumvention of contemporaneous regulations. How do you think the process of financial innovation affects the effectiveness of macroprudential regulation?
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