Is mark-to-market accounting destabilizing ? Analysis and implications for policy

@inproceedings{Heaton2010IsMA,
  title={Is mark-to-market accounting destabilizing ? Analysis and implications for policy},
  author={Chris Heaton and Deborah J. Lucas and Robert L. McDonald},
  year={2010}
}
Fundamental economic principles provide a rationale for requiring financial institutions to use mark-to-market, or fair value, accounting for financial reporting. The recent turmoil in financial markets, however, has raised questions about whether fair value accounting is exacerbating the problems. In this paper, we review the history and practice of fair value accounting, and summarize the literature on the channels through which it can adversely affect the real economy. We propose a new model… CONTINUE READING
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