Essays on The Instability of Markets and the Need for Regulation Report

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The paper "The Instability of Markets and the Need for Regulation" is a great example of a report on macro and macroeconomics. This paper critically examines the notion that markets are unstable structures, and are thus, in constant need for organization and regulation. The basic argument that is presented in the paper is that, indeed, markets are completely unstable and that they cannot be relied upon to regulate themselves. This means that governments need to intervene in order to ensure that markets are regulated as a way of preventing the severity arising from instances of bursts and volatility that usually arise from the inherent nature of markets.

Regulation is also meant to cushion the economy against the undesirable financial, economic, and social consequences of the volatility of markets. The essay is divided into three key parts as follows. Part one is about a review of the theoretical bases of the two notions of stability versus instability of markets. The second part of the essay is about the global financial crisis in the context of other forms of financial and economic crises and the lessons that can be learned from them with regard to the inherent instability of markets.

The third part of the essay sums up the argument that it is necessary for the government to regulate markets as a way of preventing the occurrence of crises and cushioning the economy from the effects of the volatility of markets. Market Stability versus Instability: Theoretical Considerations The argument as to whether markets are inherently unstable or stable is complex. What needs to be understood is that both arguments are compelling and have far-reaching ramifications in the world.

On one hand, the assumption that markets are stable means that markets are efficient in nature and that there is no need for governments to interfere in the manner in which the markets operate by attempting to regulate specific aspects therein. This argument implies that markets are able to correct their own mistakes and therefore, advocate for a complete deregulation of markets. On the other hand, the notion that markets are unstable is borne out of the belief that the very nature of markets makes them prone to volatility and sudden changes in prices.

It is this uncertainty that makes markets open to sudden changes that have the potential of disrupting social and economic equilibrium in the world.


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