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

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 …

that the macroprudential policy should optimally respond to building asset price bubbles non-monotonically depending on the …

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 …

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 …

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

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

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 …