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 …

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 …

) during financial bubbles. The SIN is constructed in two steps. First, we develop a Hidden Markov Model (HMM) of regime …

Reviewing the definition and measurement of speculative bubbles in context of contagion, this paper analyses the DotCom …. Even it is astonishing, that the contagion is lower during price bubbles, the main finding indicates the presence of …

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 …

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

This paper argues that short selling might give rise to bubbles that would otherwise not exist in equilibrium. It is …

We develop a model of rational bubbles based on leverage and the assumption of an imprecisely known maximum market size … lend to traders with limited liability in a bubble is endogenous. Bubbles reduce welfare of future investors. We provide … general conditions for the possibility of bubbles depending on uncertainty about market size, traders' degree of leverage and …