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The recent increase of interest rate spreads in Europe and their apparent detachment from underlying fundamental variables has generated a debate on multiple equilibria in the sovereign bond market (see Grauwe and Ji (2012)). We critically evaluate this hypothesis, by pointing towards an...
Persistent link: https://www.econbiz.de/10009659917
The recent increase of interest rate spreads in Europe and their apparent detachment from underlying fundamental variables has generated a debate on multiple equilibria in the sovereign bond market (see De Grauwe and Ji (2012)). We critically evaluate this hypothesis, by pointing towards an...
Persistent link: https://www.econbiz.de/10009630117
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The recent increase of interest rate spreads in Europe and their apparent detachment from underlying fundamental variables has generated a debate on multiple equilibria in the sovereign bond market (see De Grauwe and Ji (2012)). We critically evaluate this hypothesis, by pointing towards an...
Persistent link: https://www.econbiz.de/10010341164
We provide a theory to investigate the implications of time-varying bailout policy for rational bubbles in an infinite … implications of the time-varying bailout policy. We find that the optimal bailout policy is leaning against the wind, striking a …
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