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We propose a framework for understanding recurrent historical episodes of vigorous economic expansion accompanied by extreme asset valuations, as exhibited by the U.S. in the 1990s. We interpret this phenomenon as a high-valuation equilibrium with a low effective cost of capital based on...
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We propose a framework for understanding recurrent historical episodes of vigorous economic expansion accompanied by extreme asset valuations, as exhibited by the U.S. in the 1990s. We interpret this phenomenon as a high-valuation equilibrium with a low effective cost of capital based on...
Persistent link: https://www.econbiz.de/10012762624
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We propose a framework for understanding recurrent historical episodes of vigorous economic expansion accompanied by extreme asset valuations, as exhibited by Japan in the 1980's and the U.S. in the 1990's. We interpret this phenomenon as a high-valuation equilibrium with a low effective cost of...
Persistent link: https://www.econbiz.de/10012469322
interactions between asset prices, financial speculation, and macro- economic outcomes when output is determined by aggregate … heterogeneous asset valuations) matter because they induce investors to speculate. This speculation exacerbates the crash by … beliefs. Macroprudential policy that restricts speculation in the boom can Pareto improve welfare by increasing asset prices …
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