(and rally) discrete jump distributions associated with positive (and negative) bubbles. The RE condition implies that the …

We develop a model of rational bubbles based on the assumptions of unknown market liquidity and limited liability of … condition for whether rational bubbles are possible. Based on this analysis, we discuss several widely-discussed policy measures … with respect to their effectiveness in preventing bubbles. A reduction of manager bonuses or a Tobin tax can create or …

We develop a parsimonious model of bubbles based on the assumption of imprecisely known market depth. In a speculative … possibility of bubbles depending on the risk-free rate, uncertainty about market depth, and traders’ degree of leverage. This … allows us to discuss several policy measures. Bubbles always reduce aggregate welfare. Among others, certain monetary policy …

of financial bubbles depress the real economy? This paper addresses these questions by constructing an infinite …-horizon heterogeneous agent general equilibrium model with speculative bubbles. We characterize conditions under which storable goods …, regardless of their intrinsic values, can carry bubbles and agents are willing to invest in such bubbles despite their positive …

We provide a theory to investigate the implications of time-varying bailout policy for rational bubbles in an infinite …-horizon production economy. In particular, we ask two questions. First, should the government bail out asset bubbles? Second, if yes, how … bubbles are vulnerable to market sentiment and resource-consuming. The systematic risk of bubble bursting causes both asset …

This paper studies an equilibrium model with heterogeneous agents, asset price bubbles, and trading constraints. Market … liquidity is modeled as a stochastic quantity impact from trading on the price. Bubbles are larger in liquid markets and when …

that low economic growth propagates bubbles. Further exploration of the cyclicality in the bubbly asset shows that its …

Economics with equations for quantitative easing and endogenous bubbles in a new model. By running the model under a variety of …

This paper studies whether and how the central bank should prick asset price bubbles, if the effect of interest rate … policy on bubbles can significantly vary across periods. For this purpose, I first construct a financial accelerator model … with an agent-based financial market that can endogenously generate bubbles and account for their impact on the real sector …

builds up, during the run-up phase of crises and asset price bubbles, and increases when systemic risk materializes …