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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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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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Two Monetary Tools: Interest Rates and Haircuts
Ashcraft, Adam; Garleanu, Nicolae Bogdan; Pedersen, … - C.E.P.R. Discussion Papers - 2010
We study a production economy with multiple sectors financed by issuing securities to agents who face capital constraints. Binding capital constraints propagate business cycles, and a reduction of the interest rate can increase the required return of high-haircut assets since it can increase the...
Persistent link: https://www.econbiz.de/10008642875
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Collateralisation bubbles when investors disagree about risk
Broer, Tobias; Kero, Afroditi - C.E.P.R. Discussion Papers - 2014
about mean payoffs, price bubbles arise without collateralisation, which may discipline prices as pessimists demand higher …
Persistent link: https://www.econbiz.de/10011084220
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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
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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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Optimal Interventions in Markets with Adverse Selection
Philippon, Thomas; Skreta, Vasiliki - C.E.P.R. Discussion Papers - 2010
We study interventions to restore efficient lending and investment when financial markets fail because of adverse selection. We solve a design problem where the decision to participate in a program offered by the government can be a signal for private information. We charac terize optimal...
Persistent link: https://www.econbiz.de/10008468692
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Financial Crises and Economic Activity
Cecchetti, Stephen G; Kohler, Marion; Upper, Christian - C.E.P.R. Discussion Papers - 2009
We study the output costs of 40 systemic banking crises since 1980. Most, but not all, crises in our sample coincide with a sharp contraction in output from which it took several years to recover. Our main findings are as follows. First, the current financial crisis is unlike any others in terms...
Persistent link: https://www.econbiz.de/10008472105
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Inequality, Leverage and Crises
Kumhof, Michael; Rancière, Romain - C.E.P.R. Discussion Papers - 2011
The paper studies how high leverage and crises can arise as a result of changes in the income distribution. Empirically, the periods 1920-1929 and 1983-2007 both exhibited a large increase in the income share of the rich, a large increase in leverage for the remainder, and an eventual financial...
Persistent link: https://www.econbiz.de/10008784720
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Betting the House
Jordà, Òscar; Schularick, Moritz; Taylor, Alan M. - C.E.P.R. Discussion Papers - 2014
demonstrate that loose monetary conditions lead to booms in real estate lending and house prices bubbles; these, in turn …
Persistent link: https://www.econbiz.de/10011145419