Aoki, Kosuke; Nakajima, Tomoyuki; Nikolov, Kalin - In: Journal of Mathematical Economics 53 (2014) C, pp. 164-174
We build a model economy in which a shortage of safe assets can create conditions for intrinsically useless ‘safe’ bubble assets to circulate at a positive price. Our environment features infinitely lived individuals who are not subject to credit constraints but who face uninsurable...