We study a dynamic economy where credit is limited by insufficient collateral and, as a result, investment and output … are too low. In this environment, changes in investor sentiment or market expectations can give rise to credit bubbles …, that is, expansions in credit that are backed not by expectations of future profits (i.e. fundamental collateral), but …

, counties) where household leverage had increased more during the credit boom. This pattern is difficult to explain with …-sectional evidence display high sensitivity of real activity to nominal credit shocks. Since home equity borrowing and public money are …

region. It tries to identify episodes of credit boom and analyzes the possible correlation between such booms, consumption … liquidity-constrained households, the paper finds that current trends in household credit markets largely reflect an equilibrium … phenomenon, in which household credit increases rapidly from extremely low initial levels, in the context of a relaxation of …

While theory predicts different effects of household credit and enterprise credit on the economy, the empirical … the different effects of these two components on real sector outcomes. We find that: 1) enterprise credit raises economic … growth whereas household credit has no effect; 2) enterprise credit reduces income inequality whereas household credit has no …