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Pride Goes Before a Fall : Federal Reserve Policy and Asset Markets
Reinhart, Carmen M. - 2011
Considerable debate rages about whether Federal Reserve policy was too lax in the early part of the 2000s, thereby fueling the home-price bubble that was the proximate cause of the global financial crisis. We present evidence that the view that modest alterations to monetary policy have vast...
Persistent link: https://www.econbiz.de/10013129137
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Theoretical Notes on Bubbles and the Current Crisis
Martin, Alberto - 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/10013137762
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Monetary Exchange in Over-the-Counter Markets : A Theory of Speculative Bubbles, the Fed Model, and Self-Fulfilling Liquidity Crises
Lagos, Ricardo - 2015
We develop a model of monetary exchange in over-the-counter markets to study the effects of monetary policy on asset prices and standard measures of financial liquidity, such as bid-ask spreads, trade volume, and the incentives of dealers to supply immediacy, both by participating in the...
Persistent link: https://www.econbiz.de/10013015987
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The Chinese Warrants Bubble
Xiong, Wei - 2009
supporting the resale option theory of bubbles: investors overpay for a warrant hoping to resell it at an even higher price to a …
Persistent link: https://www.econbiz.de/10013155021
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Bubbles and Self-Enforcing Debt
Hellwig, Christian - 2010
debt is equivalent to the allocations that are sustained with unbacked public debt or rational bubbles; for the latter …
Persistent link: https://www.econbiz.de/10012760614
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Asset Prices in a Flexible Inflation Targeting Framework
Cecchetti, Stephen G.; Genberg, Hans; Wadhwani, Sushil - 2021
2000), and that they might be in a better position to react to long-lived bubbles than many market participants. However …
Persistent link: https://www.econbiz.de/10013252297
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Economic Growth with Bubbles
Martin, Alberto - 2010
We develop a stylized model of economic growth with bubbles. In this model, financial frictions lead to equilibrium … dispersion in the rates of return to investment. During bubbly episodes, unproductive investors demand bubbles while productive … dynamically inefficient: otherwise, there would be no demand for bubbles. This dynamic inefficiency, however, might be generated …
Persistent link: https://www.econbiz.de/10013145230
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Leverage and Asset Bubbles : Averting Armageddon with Chapter 11?
Miller, Marcus H. - 2010
An iconic model with high leverage and overvalued collateral assets is used to illustrate the amplification mechanism driving asset prices to 'overshoot' equilibrium when an asset bubble bursts--threatening widespread insolvency and what Richard Koo calls a 'balance sheet recession'. Besides...
Persistent link: https://www.econbiz.de/10013145248
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Monetary Policy, Asset-Price Bubbles and the Zero Lower Bound
Robinson, Tim; Stone, Andrew - 2021
will be optimal varies from one type of bubble to another and, for certain bubbles, from one period to the next. It is …
Persistent link: https://www.econbiz.de/10013229381
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Managing Credit Bubbles
Martin, Alberto - 2014
are too low. In this environment, changes in investor sentiment or market expectations can give rise to credit bubbles …
Persistent link: https://www.econbiz.de/10013057401