Strategic complementarity adds endogenous volatility, so that the market prices are artificially volatile as compared to the fundamental values in a marked-to-market economy”. All the aspects I have been enumerating contribute, among other things, to increase volatility in asset prices and possible episodes of significant misalignment. This prospect is certainly a cause of uneasiness for monetary and financial authorities.
From this standpoint it is interesting to examine two views that seek to identify general factors behind the tendency for asset price volatility. The first approach has been developed in the BIS research, in particular by Claudio Borio and Philip Lowe (2002) 8 .