output comes from an unusual regime. -- Bubbles ; fiscal theory of the price level ; collateral constraints ; neutrality …This paper proposes and tests a theory of credit-driven asset bubbles which are neutral in their real effects. When a … lender such as a government, central bank, or banking sector is willing to lend infinitely against collateral, explosive …

We show that in a model with equity and debt financing, the specfication of the borrowing constraint is crucial to … financial frictions and labor demand, as in Jermann and Quadrini (2012), is key to the result. A collateral constraint a la …