We develop a model of rational bubbles based on leverage and the assumption of an imprecisely known maximum market size … lend to traders with limited liability in a bubble is endogenous. Bubbles reduce welfare of future investors. We provide … general conditions for the possibility of bubbles depending on uncertainty about market size, traders' degree of leverage and …

What risks do asset price bubbles pose for the economy? This paper studies bubbles in housing and equity markets in 17 … countries over the past 140 years. History shows that not all bubbles are alike. Some have enormous costs for the economy, while … others blow over. We demonstrate that what makes some bubbles more dangerous than others is credit. When fueled by credit …

asset bubbles and crises. We analyse the relationship between the S&P 500 and major emerging Caribbean stock markets and …