The Economics of Financial Markets and the 1987 Crash

This is a systematic account of the antecedents and economic consequences of the stock market crash of 1987 in the world's major financial centres. In determining the causes of that crash, the author examines the ways in which finance and capital markets operate and concludes that the crash was an economically insignificant event in the general inflation of capital markets. Toporowski further argues that rather than the crash itself, it was capital market inflation that eventually contributed to the economic slump of the 1990s. In so doing, he presents original theories on finance and capital markets, banking cycles, financial regulation and the economic consequences of deregulation. The book also features a critique of Keynes' liquidity preference theory and an account of how Japanese financial institutions helped Wall Street and the London market after the crash.