With the recent collapse of the asset price “bubble,” Japanese banks encountered significant pressure from both a sharp …

Why do asset price bubbles continue to appear in various markets? This paper provides an overview of recent literature … on bubbles, with significant attention given to behavioral models and rational models with frictions. Unlike the standard … rational models, the new literature is able to model the common characteristics of historical bubble episodes and offer …

An asset bubble relaxes collateral constraints and increases borrowing by credit-constrained agents. At the same time …, as the bubble deflates when constraints start binding, it amplifies downturns. We show analytically and quantitatively … that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the …

inflation, especially in the real estate market. While asset price bubbles were present in most Asian countries during the 1990s …