a larger set of technical information is not evenly distributed. this may also reinforce the role of “ gurus ”. · third, index management : as a fund management technique, it has proven very popular on equity markets and may have contributed to exacerbating movements in financial asset prices. because their goal is to mimic the performance of indices, “ passive managers ” try constantly to match the composition of their benchmark. they thus help to amplify market trends, buying more as the market rises and liquidating more as the market drops. it can be argued that index funds distort the price of the targeted indices and that, as a result, the indices end up creating rather than measuring performance. · last but not least, the impact of risk management techniques on market dynamics is particularly enlightening with regard to the question of asset price overshooting. value - at - risk calculations have become a crucial element of the standard approach used by market participants to evaluate the risk inherent in their market activities and to set up exposure limits. of course, central banks and financial institutions should continue to encourage the use of these instruments. but, in times of financial turmoil, the growing use of sophisticated risk management techniques by financial intermediaries might have had the paradoxical effect of amplifying the initial shock, exhausting liquidity and contributing to contagion m. bordo, b. eichengreen, d. klingebiel and m. s. martinez - peria : “ is the crisis problem growing more severe? ”, cepr, september 2000. phenomena. regardless of the intrinsic qualities of these risk management tools, we see that their growing use in the same fashion by all market participants may have produced pernicious effects. when market players rely on converging risk evaluations, they tend to take the same decisions at the same time, thus amplifying the initial shock to prices and trading volumes. all those factors have one consequence in common : they encourage homogenous behaviour and reactions to the detriment of the diversity that is indispensable to the smooth functioning of financial markets. so, what are the possible policy implications of these recent patterns or trends on financial markets? my opinion is that financial authorities might reflect on some ways to foster behavioral diversity in financial markets. as we have just seen before, some specific factors, such as short - termism, mimetic behaviour etc … have tended to make “ contrarians ” less pro

, 2015. 4 calculations based on estimation results from abbritti, m. and weber, s. ( forthcoming ), “ reassessing the role of labor market institutions for the business cycle, ” international journal of central banking. 5 abbritti, m. and mueller, a. ( 2013 ), “ asymmetric labor market institutions in the emu and the volatility of inflation and unemployment differentials, ” journal of money, credit and banking, vol. 45 ( 6 ), pp. 1165 - 1186. 6 see blanchard, o. and giavazzi, f. ( 2003 ), “ the macroeconomic effects of regulation and deregulation in goods and labor markets ”, the quarterly journal of economics, vol. 118, august, pp. 879 - 907. 7 banerji, a. et al. ( 2017 ), “ labor and product market reforms in advanced economies : fiscal costs, gains, and support ”, imf staff discussion note, march. 8 simulations based on ecb staff research ( masuch, k., moshammer, e. and pierluigi, b. ( 2016 ), “ institutions, public debt and growth in europe ”, working paper series, no 1963, ecb, frankfurt am main, september ) show 4 / 5 bis central bankers'speeches that enhancing institutions towards average practices in the eu could lift long - term real gdp per capita for some countries by between 5 % and 18 % ( in the course of about ten years ). 9 sondermann, d. ( 2016 ), “ towards more resilient economies : the role of well - functioning economic structures ”, working paper series, no 1984, ecb, frankfurt am main, november. 10 for an early example of this view, see gordon, r. ( 1996 ), “ macroeconomic policy in the presence of structural maladjustment ”, nber working paper series, no 5739, national bureau of economic research, september. 11 banerji, a. et al., op. cit. 12 between the first quarter of 2015 and the first quarter of 2017, see eurostat ’ s european union labour force survey. see also sestito, p. and viviano, e. ( 2016 ), “ hiring incentives and / or firing cost reduction? evaluating the impact of the 2015 policies on the italian labour market ”, questioni di economia e fin