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

Can banks trade credit default swaps (CDSs) referenced on their current corporate clients at competitive prices, or are …