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This paper studies the actions of the U.S. Federal Reserve Bank during the financial crisis from 2007-2012. Whereas the first two parts concentrate on asset bubble theory and the development of the housing bubble, the third part rates the performance of the Federal Reserve during the crisis. The...
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We develop a tractable rational bubbles model with financial frictions, downward nominal wage rigidity, and the zero … leaning-against-the-bubble policy that balances the trade-off between the booms and busts of bubbles …
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