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Theoretical Notes on Bubbles and the Current Crisis
Martin, Alberto; Ventura, Jaume - C.E.P.R. Discussion Papers - 2010
We explore a view of the crisis as a shock to investor sentiment that led to the collapse of a bubble or pyramid scheme in financial markets. We embed this view in a standard model of the financial accelerator and explore its empirical and policy implications. In particular, we show how the...
Persistent link: https://www.econbiz.de/10008684673
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Political Credit Cycles: The Case of the Euro Zone
Fernández-Villaverde, Jesús; Garicano, Luis; Santos, Tano - C.E.P.R. Discussion Papers - 2013
We study the mechanisms through which the adoption of the Euro delayed, rather than advanced, economic reforms in the Euro zone periphery and led to the deterioration of important institutions in these countries. We show that the abandonment of the reform process and the institutional...
Persistent link: https://www.econbiz.de/10011084343
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Bubbles and Central Banks: Historical Perspectives
Brunnermeier, Markus K; Schnabel, Isabel - C.E.P.R. Discussion Papers - 2015
This paper reviews some of the most prominent asset price bubbles from the past 400 years and documents how central … banks (or other institutions) reacted to those bubbles. The historical evidence suggests that the emergence of bubbles is … also suggests that a purely passive “cleaning up the mess” stance toward the buildup of bubbles is, in many cases, costly …
Persistent link: https://www.econbiz.de/10011249380
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With a Bang, Not a Whimper: Pricking Germany's 'Stock Market Bubble' in 1927 and the Slide into Depression
Voth, Hans-Joachim - C.E.P.R. Discussion Papers - 2002
Asset price inflation presents central banks with a puzzle. I examine the case of Germany, 1925-7, when the Reichsbank intervened to bring down stock prices, rectify imbalances and curb speculation. Present value relations, comparisons with historical valuation measures and the time-series...
Persistent link: https://www.econbiz.de/10005792124
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Credit, Financial Stability, and the Macroeconomy
Taylor, Alan M. - C.E.P.R. Discussion Papers - 2015
Since the 2008 global financial crisis, and after decades of relative neglect, the importance of the financial system and its episodic crises as drivers of macroeconomic outcomes has attracted fresh scrutiny from academics, policy makers, and practitioners. Theoretical advances are following a...
Persistent link: https://www.econbiz.de/10011213304
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A Corporate Balance Sheet Approach to Currency Crises
Aghion, Philippe; Bacchetta, Philippe; Banerjee, Abhijit - C.E.P.R. Discussion Papers - 2001
This Paper presents a general equilibrium currency crisis model of the 'third generation', in which the possibility of currency crises is driven by the interplay between private firms' credit-constraints and nominal price rigidities. Despite our emphasis on microfoundations, the model remains...
Persistent link: https://www.econbiz.de/10005124430
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On Keeping Your Powder Dry: Fiscal Foundations of Financial and Price Stability
Obstfeld, Maurice - C.E.P.R. Discussion Papers - 2013
Banking systems have rapidly grown to a point where for many countries bank assets amount to multiples of GDP. As a consequence, government’s capacity to provide stability-enhancing fiscal guarantees against systemic crises can no longer be taken for granted. As regulation of dynamic financial...
Persistent link: https://www.econbiz.de/10011084186
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Complexity and Monetary Policy
Orphanides, Athanasios; Wieland, Volker - C.E.P.R. Discussion Papers - 2012
The complexity resulting from intertwined uncertainties regarding model misspecification and mismeasurement of the state of the economy defines the monetary policy landscape. Using the euro area as laboratory this paper explores the design of robust policy guides aiming to maintain stability in...
Persistent link: https://www.econbiz.de/10011084255
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A Dynamic General Equilibrium Analysis of Monetary Policy Rules, Adverse Selection and Long-Run Financial Risk
Blommestein, Hans J.; Eijffinger, Sylvester C W; Qian, … - C.E.P.R. Discussion Papers - 2011
This paper builds a dynamic general equilibrium macro-finance model with two types of borrowers: entrepreneurs who want to produce and gamblers who want to play a lottery. It links central bank's interest rate policy to expected cash flows of both types. This link enables us to study how the...
Persistent link: https://www.econbiz.de/10009371476
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Riding the South Sea Bubble
Temin, Peter; Voth, Hans-Joachim - C.E.P.R. Discussion Papers - 2004
The efficient markets hypothesis implies that, in the presence of rational investors, bubbles cannot develop. We …
Persistent link: https://www.econbiz.de/10005136583