economic model that captures the links between asset prices, credit expansion, and real economic activity. Standard DSGE models … used to dampen the resulting excess volatility, including a direct response to house price growth or credit growth in the … to house price growth or credit growth can stabilize some economic variables, it can significantly magnify the volatility …

This paper proposes and tests a theory of credit-driven asset bubbles which are neutral in their real effects. When a … asset bubbles can form which exactly offset a bubble in household liabilities. Surprisingly, evidence from a VAR using long …-run restrictions supports the idea that asset bubbles are approximately neutral in their real effects before 2007. The evidence becomes …

In modern macroeconomic models it is difficult to obtain explosive price bubbles on assets with positive net supply …. This paper shows that it is possible to obtain explosive bubbles in certain situations when assets such as land are used as … households wish to borrow more. If the financial sector or government is willing to accommodate this by issuing credit …

uncertainty. Positive/negative bubbles arise when prior public beliefs about the aggregate productivity of producers (business … uncollateralized credit. We find that this kind of policy is more successful in suppressing equity price swings than moderating output …

times of high uncertainty, firms reduce their credit demand due to delayed investments or a deterioration in their credit … worthiness, while at the same time banks are more exposed to negative shocks to their balance sheet and thereby reduce credit … supply. To isolate the uncertainty effect from the credit supply effect, we employ matched bank-firm loan data covering all …

Empirical evidence suggests that widespread financial distress, by disrupting enforcement of credit contracts, can be … self-propagatory and adversely affect the supply of credit. We propose a unifying theory that models the interplay between … enforcement, borrower default decisions, and the provision of credit. The central tenets of our framework are the presence of …

We employ quarterly credit standards data from the Bank Lending Survey, covering 14 EU countries for the period 2003Q1 …-2016Q1. By linking consecutive surveys and utilizing loan officers' responses regarding actual and expected credit standards …