Martin, Alberto; Ventura, Jaume - Department of Economics and Business, Universitat … - 2012
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 … instead by expectations of future credit (i.e. bubbly collateral). Credit bubbles raise the availability of credit for …