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Managing Credit Booms and Busts : A Pigouvian Taxation Approach

Jeanne, Olivier - 2010

We study a dynamic model in which the interaction between debt accumulation and asset prices magnifies credit booms and busts. We find that borrowers do not internalize these feedback effects and therefore suffer from excessively large booms and busts in both credit flows and asset prices. We...

Persistent link: https://www.econbiz.de/10013138082

Credit Booms, Financial Crises and Macroprudential Policy

Gertler, Mark; Kiyotaki, Nobuhiro; Prestipino, Andrea - 2022

We develop a model of banking crises which Is consistent with two important features of the data: First, banking crises are usually preceded by credit booms. Second, credit booms often do not result in a crisis. That is, there are "good" booms as well as "bad" booms in the language of Gorton and...

Persistent link: https://www.econbiz.de/10013307160

De Facto Fiscal Space and Fiscal Stimulus : Definition and Assessment

Aizenman, Joshua - 2010

We define the notion of a 'de facto fiscal space' of a country as the inverse of the tax-years it would take to repay the public debt. Specifically, we measure the outstanding public debt relative to the de facto tax base, where the latter measures the realized tax collection, averaged across...

Persistent link: https://www.econbiz.de/10013135878

Understanding the Great Depression : Lessons for Current Policy

Cecchetti, Stephen G. - 2021

Over the four years beginning in the summer of 1929, financial markets, labor markets and goods markets all virtually ceased to function. Throughout this, the government policymaking apparatus seemed helpless. Since the end of the Great Depression, macroeconomists have labored diligently in an...

Persistent link: https://www.econbiz.de/10013224184

Boom-Bust Cycles in Middle Income Countries : Facts and Explanation

Tornell, Aaron; Westermann, Frank - 2021

In this paper we characterize empirically the comovements of macro variables typically observed in middle income countries, as well as the boom-bust cycle' that has been observed during the last two decades. We find that many countries that have liberalized their financial markets, have...

Persistent link: https://www.econbiz.de/10013240937

Monetary Policy for a Bubbly World

Asriyan, Vladimir - 2016

We propose a model of money, credit and bubbles, and use it to study the role of monetary policy in managing asset … bubbles. In this model, bubbles pop up and burst, generating fluctuations in credit, investment and output. Two key insights … emerge from the analysis. First, the growth rate of bubbles, which is driven by agents' expectations, can be set in real or …

Persistent link: https://www.econbiz.de/10012982946

The Business Cycles of Balance-of-Payment Crises : a Revision of Mundellan Framework

Mendoza, Enrique G.; Uribe, Martín - 2021

In his seminal 1960 article Robert Mundell proposed a model of balance-of-payments crises in which confidence in the continuation of a currency peg depended on the observed holdings of central bank foreign reserves. We examine the implications of a reformulation of this view from the perspective...

Persistent link: https://www.econbiz.de/10013235602

Bubbles, Crises, and Heterogeneous Beliefs

Xiong, Wei - 2013

individuals, to explain bubbles, crises, and endogenous risk in financial markets …

Persistent link: https://www.econbiz.de/10013084737

Monetary Exchange in Over-the-Counter Markets : A Theory of Speculative Bubbles, the Fed Model, and Self-Fulfilling Liquidity Crises

Lagos, Ricardo - 2015

. The theory predicts that asset prices carry a speculative premium that reflects the asset's marketability and depends on … anomalous. The theory also exhibits rational expectations equilibria with recurring belief driven events that resemble liquidity …

Persistent link: https://www.econbiz.de/10013015987

Bubbles and Capital Flow Volatility : Causes and Risk Management

Caballero, Ricardo J. - 2005

Emerging market economies are fertile ground for the development of real estate and other financial bubbles. Despite … value in the developed world. Bubbles are beneficial because they provide domestic stores of value and thereby reduce … capital flow reversals. We show that domestic financial underdevelopment not only facilitates the emergence of bubbles, but …

Persistent link: https://www.econbiz.de/10012784276

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