Bottazzi, Jean-Marc; Luque, Jaime; Pascoa, Mario R. - Departamento de Economía, Universidad Carlos III de Madrid - 2011
Securities markets theory includes repo and distinguishes shorting from issuing. Here we revisit whether trading alone can give rise to Ponzi schemes and rational bubbles. We show that under the same institutional arrangements that limit re-hypothecation (e.g., through segregated haircut rules...